Financial activity based on tropical weather events

ABSTRACT

A graphical user interface for a financial activity network that includes a central managing system connected to a plurality of participant terminals. Rules governing operation of the financial activity are stored for future reference. A participant provides investment information such as a map location for the predicted strike by the natural event and, optionally, one or more secondary parameters relating to the natural event, such as the time interval between the time of investment and the time of all event strike and/or the severity of the event strike according to an established scale. Graphical user interfaces are described for such activities.

CROSS-REFERENCE TO RELATED APPLICATION

This application is a continuation of U.S. non-provisional patentapplication Ser. No. 11/312,783, filed Dec. 20, 2005 which claims thebenefit of U.S. Provisional Patent Application No. 60/637,784, filedDec. 21, 2004 which are incorporated by reference herein in theirentirety.

BACKGROUND OF THE INVENTION

1. Field of the Invention

The present invention pertains to financial activities and in particularto such activities in which a financial return may be paid out based ona participant's prediction of naturally occurring tropical weatherevents, and especially such events monitored and documented by anindependent external information source.

2. Description of the Related Art

Oftentimes, natural events such as hurricanes and other tropical weathersystems contain sufficient energy to impose potentially significantfinancial burdens arising from damage to property. It is the nature ofsuch catastrophes that they cannot be predicted with exact certainty,even in severity or number of occurrences within an event season or theexact time and/or duration of an event. These types of natural eventsinclude, for example, earthquakes, tornadoes and tropical cyclones, aterm given to all circulating weather systems over tropical waters (andof special interest here, the Atlantic basin and eastern Pacific).Tropical cyclones include tropical weather systems referred to as“hurricanes” if they are sufficiently strong. Tropical cyclones whichgrow in intensity so as to become hurricanes originate at sea and maymake landfall and travel along a land portion before dissipating orreturning to the sea. Homeowners and business insurance policiestypically contain deductible provisions ranging from 2% to 15% of thevalue of a home or worksite. Further, these same policies do not provideany coverage for the outside areas of a home or business such aslandscaping, outside lighting, docks, fencing and the like. Often,property owners do not have sufficient flood insurance or have otheromissions or insufficient coverage which result in catastrophicfinancial losses in even the lowest rated hurricanes. Great lossessuffered by property owners, such as those located along coastal andoutlying areas, can be overwhelming for those who cannot afford to beself-insured. Insurance companies offer substantial aid for theseindividuals, but economic strains caused by unusually active hurricaneseasons have resulted in relatively high premiums. In order to makecertain that insurance protection is available to individuals on anongoing basis, various legislation and regulations have been enacted.However, substantial economic burdens remain, such as high deductibleamounts, and excluded items, which represent damage costs which must beborne directly by the individual. Further, there are considerable delaysin obtaining insurance relief, due to a number of factors outside of theowner's control, such as delays associated with adjuster scheduling,claim processing and governmental determinations. These delays areconsiderably extended when widescale damage occurs.

As if the present problems are not enough, it has been predicted thatthe increased storm activity of the past few years is likely to continuein the Atlantic basin for the next 15 to 20 years. One prediction for2006 is that 17 named storms will occur, nine of which can becomehurricanes and five of which are expected to develop into major storms,with winds of 111 mph or more. By comparison, in the year 2005, 26 namedstorms were reported. Of the 13 major storms that formed the past twoyears, seven struck the U.S., whereas, according to the historicalaverage, only one of every three reported storms would be considered“major” storms.

In addition to increased weather severity, other factors have been citedas causes for unexpectedly large damage estimates. For example, it hasbeen estimated that, by year 2020, a single Miami storm could causecatastrophic losses of 500 Billion—several times the damage inflicted byHurricane Katrina. This is attributed to the rise in additional propertydevelopment demanded by a growing population, along with a rise inpurchasing power with greater individual wealth. These estimates havenot included any consideration of inflation.

Other lessons are being learned from hurricane Katrina. For example, theGreat Miami hurricane of 1926 caused about $760 million in damage, in2004 dollars. Surprisingly, if the hurricane were to be repeated at thepresent time (the same magnitude following the same track) damage isestimated to be as large as $130 billion, due in large part topopulation expansion in the area. In the year 2020 damage estimates fromthe same hurricane are estimated to be as great as $500 billion. Inaddition to primary damage factors such as loss of property, otherfactors directly result from a natural event. For example, the FederalEmergency Management Agency (FEMA) has encountered significantdifficulty in providing temporary housing for disaster victims. Loss ofdwellings is aggravated by extensive loss of jobs, further slowingeconomic and personal recovery. For example, FEMA's hotel program for2005 cost the federal government $325 million and, at its peak, coveredapproximately 85,000 rooms.

SUMMARY OF THE INVENTION

The invention is generally directed to conducting financial activitiesbetween a provider and a plurality of participants, based on a naturalevent such as a hurricane or tropical cyclone, or other tropical weatherevent.

Tropical cyclones are low-pressure weather systems that develop at seaand at low latitudes, beginning as relatively low-energy tropicaldepressions. As storm energy builds, tropical depressions begin toexhibit a rotating or circular weather pattern, and if the stormintensity is sufficient it is classified as a tropical cyclone. Tropicalcyclones include “tropical storms,” but the most intense tropicalcyclones are referred to (depending on the ocean basin in which theyoccur) as “hurricanes,” “typhoons,” or simply “cyclones.” According tothe National Hurricane Center, “hurricane” is a name for a tropicalcyclone that occurs in that oceanic area generally referred to as theAtlantic Basin, and which is defined by certain minimum wind speeds.“Tropical cyclone” is the generic term used for low-pressure systems ofgreat intensity that develop in the tropics and meet a criterion forrelatively high maximum sustained wind speeds. The intensity ofhurricanes is measured according to the Saffir-Simpson scale.

In one aspect, the present invention can be employed as part of a viablesolution to the economic and financial devastation which affectscitizens as well as governments and which is caused by naturallyoccurring catastrophes such as hurricanes. An economic solution can nowbe offered that does not use government or public funds and thereforedoes not require tax payer funding to replenish government reserves. Ifdesired, only funds provided by private entities can be used to augmentgovernmental financial assistance for catastrophic occurrences.

The invention in one implementation encompasses a system for providing auser, selection of land area database data including geographic itemsand data relevant to conducting a financial activity. The graphical userinterface being arranged to display a geographic item, receive a userselection of a displayed portion of the item and provide additionaldatabase data relating to said selected portion, in response to theselection.

The invention, in another implementation, is directed to an article ofmanufacture including a machine readable medium for causing a computersystem to conduct a financial activity between a provider and aplurality of participants, based on a natural event. Included is amodule for conducting financial activity between a provider and aplurality of participants, for receiving natural event information froman external independent information source and for providing financialactivity information to the participants using a graphical userinterface for providing user selection of land area database dataincluding geographic items and data relevant to conducting a financialactivity, the graphical user interface being arranged to display ageographic item, receive a user selection of a displayed portion of theitem and provide additional database data relating to said selectedportion, in response to said selection.; at least one communicationmodule for conducting a communication activity communicating between thefinancial activity module and an external independent information sourcefor receiving natural event information from the external independentinformation source. The at least one communication module is operatedfor communicating between the financial activity module and theparticipants to receive prediction data from the participants,pertaining to the natural event. Also included is a module for comparingthe participants' prediction data to the indication of the occurrence ofthe natural event and the at least one communication module furthercommunicating between the financial activity module and the participantsto provide to the participants an indication of a matching outcome basedupon a matching outcome of the comparing step and to indicate to theparticipants having a protective outcome from the comparing step, theportion of funds to be paid from a common pool collected from theparticipants.

In yet another implementation, the invention is directed to a system fordisplaying on a graphical user interface, information relating tofinancial activity concerning naturally occurring tropical events, forinvestment related actions by a user. The system includes a componentfor graphically displaying and updating in substantially real time in afirst portion of said graphical user interface, a map of user selectablegeographical areas for potential investment, a component for graphicallydisplaying and updating in substantially real time in a second portionof said graphical user interface, probabilities for each geographic areaselected by the user, of a first landstrike of a hurricane originatingat sea, a component for graphically displaying and updating insubstantially real time in a third portion of said graphical userinterface, data for each geographic area selected by the user, relevantto conducting a financial activity and a component for graphicallydisplaying said trade related actions made on said graphical userinterface by said user.

In another implementation, the invention is directed to a computerimplemented method of providing user selection of land area databasedata including geographic items and data relevant to conducting afinancial activity. The method comprises displaying on a graphical userinterface a geographic item, receiving a user selection of a displayedportion of the item and, in response to said selection, providingadditional database data relating to said selected portion.

In a further implementation, the invention is directed to a graphicaluser interface for providing user selection of land area database dataincluding geographic items and data relevant to conducting a financialactivity. The graphical user interface is arranged to display ageographic item, receive a user selection of a displayed portion of theitem and provide additional database data relating to said selectedportion, in response to said selection.

BRIEF DESCRIPTION OF THE DRAWINGS

Features of exemplary implementations of the invention will becomeapparent from the description, the claims, and the accompanying drawingsin which:

FIG. 1 is a schematic representation of a financial activity networkimplementing the present invention;

FIG. 2 is a schematic representation of a financial activity systemimplementing the present invention;

FIG. 3 is a schematic representation of a first participant terminal;

FIG. 4 is a schematic representation of a second participant terminal;

FIG. 5 is a schematic representation of a point-of-purchase participantterminal;

FIG. 6 is a schematic representation of a standalone participantterminal;

FIG. 7 is a schematic representation of a first data display;

FIGS. 8 a-8 f are schematic representations of a series of screendisplays;

FIGS. 9-12 together comprise a schematic flow diagram representing oneexample of system operation;

FIGS. 13-18 are graphical depictions of data screens implementing afinancial activity according to principles of the present invention;

FIG. 19 is a schematic drawing illustrating treatment given to a unitarea addressed in an exemplary financial activity;

FIG. 20 is a schematic representation of the relationship between shareprices and dates of participation in a financial activity, prior tooccurrence of a natural event;

FIG. 21 is a table showing examples of illustrative share prices;

FIG. 22 is a table showing Poisson probabilities and otherprobabilities; and

FIG. 23 is a table illustrating trade-offs involved in choosing thenumber of financial activities to be run.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS

The invention disclosed herein is, of course, susceptible of embodimentin many different forms. Shown in the drawings and described hereinbelow in detail are preferred embodiments of the invention. It is to beunderstood, however, that the present disclosure is an exemplificationof the principles of the invention and does not limit the invention tothe illustrated embodiments.

For ease of description, financial activity networks and other systems,articles of manufacture, and apparatus embodying the present inventionare described herein below in their usual assembled position as shown inthe accompanying drawings and terms such as upper, lower, horizontal,longitudinal, etc., may be used herein with reference to this usualposition. However, the systems, articles of manufacture and apparatusmay be manufactured, transported, sold, or used in orientations otherthan that described and shown herein.

Introduction

On-line performances have been proposed for a variety of financialactivities. These activities may be divided in a number of differentways such as gambling and non-gambling activities, for example. Gamingor gambling systems are in place which emulate traditional gamblingactivities in an on-line, internet software-based program, giving theusers the look and feel of traditional gambling activities. Suchgambling variants have been extended to nontraditional games of chancebased on virtually any experience known to mankind. Although gamingactivities can receive substantial benefit from implementations of thepresent invention, the present invention can also be employed with gamesof skill and non-gaming financial transactions.

In one instance, the present invention is concerned with financialactivity based upon games of skill in which participants processhistoric and other data and apply scientific principles and acquiredanalytical skills to arrive at informed decisions relating to thepredictions of future naturally occurring activities. In one instance, aparticipant makes an investment of funds based upon one or more informeddecisions, thereby contributing to a common pool from which payouts aremade, for example, based upon the accuracy, level of detail and timingof their prediction.

The present invention, in one instance, is also concerned withtraditional financial activities which lie outside the area of gambling.More specifically, in one example, the present invention is concernedwith allocating and managing a fund collected from participants, i.e.investors who seek to offset an unpredictable but nonethelesspotentially catastrophic financial burden caused by property loss due tonatural events. In one instance, these types of financial activities arebased upon the participant's property interests. Although such financialinvestments do at times come with a substantial element of risk in theexpectation and amount of return, it has long been recognized that suchfinancial investments do not represent gambling activities.

The present invention finds immediate application in the field ofoffsetting losses of those who live or find themselves in a particulargeographic area subjected to natural events which cause significantdamage to their property interests (e.g. homes, businesses, rentals, andvacation shares). In one instance, the present invention is concernedwith offsetting losses without governmental interaction. Examples ofsuch natural events contemplated by the present invention, includenaturally occurring phenomena without human causality, such as tropicalweather systems such as hurricanes as well as other tropical weatherevents.

The premise of the financial activity is that investors can exercisepersonal initiative to research known naturally occurring activity andmake certain predictions relating to forthcoming activity for aparticular season or year. A return on their investment can be paid outat year's end or once a natural event has concluded, with the returnbeing based upon certain factors such as the accuracy of theirprediction, the amount of time between their investment and theoccurrence of a natural event, and the skillful use of established lawsof statistics and other resources available to an investor. Time andeffort spent in researching natural activity can help to improve theaccuracy of predictions made.

External Objective Information Sources

In one instance, the present invention incorporates conclusions,findings and reports of one or more external objective informationsources such as an independent disinterested third party that providespublicly available information and conclusions. The terms “external” and“independent” refer to entities which are separate from the providerand/or participants of the financial activity. In one instance, anexternal objective information source provides information pertaining toa natural event (in one example an indication that a defined naturalevent has occurred, and in another example, that the defined naturalevent has concluded). In another instance, the external objectiveinformation source provides natural event data, such as a point oflandfall or a land track of a storm originating at sea.

In one instance, the present invention incorporates into financialactivities, independent objective information which is based uponnaturally occurring events that are studied by the external objectiveinformation source (and which, in one instance, is publicly available).In one example, financial activities contemplated by the presentinvention are directed to predictions of natural event activity, withfinancial investments being made before the activity has occurred and/orconcluded. Payouts or the assigning of points or other value accordingto a successful, matching outcome of the financial activity may be basedupon multiple factors, some of which are determinable by an externalobjective information source. Examples include the measurable severityof the natural event, details concerning occurrence of the natural event(such as its points or path of terrestrial contact) and the timing of aparticipant's investment (such as the amount of lead time given by theinvestor prior to event conclusion).

In many instances, an external objective independent information sourceis relied upon for its expertise in studying, and measuring naturalevent phenomena as well as drawing conclusions from data collected fromnatural events. Oftentimes, reports made available to the public andothers include inferences and conclusions drawn by an expert agency,which goes beyond a mere relating of observed facts. According to oneaspect of the present invention, information which is key to carryingout a financial activity (such as the time and place of occurrence ofthe natural activity) is obtained from a source external to the providerof the financial activity.

As will be seen herein, it is generally preferred that the identity ofthe external objective information source is defined beforehand, in arules database or in some other manner. In one instance, the externalobjective independent information source provides facts and conclusionswhich are made generally available to the public, or at least toindividuals likely to participate in the financial activity. In thismanner, individuals interested in participating in the financialactivity and those participants already engaged in the financialactivity can monitor progress of a natural event, independent of thefinancial activity. In one instance, the present invention contemplatesthat participants in the financial activity will be able to readilyobtain expert information and skill-building technical intelligence fromsources independent of the financial activity, thus enhancing motivationof the participants to engage in the financial activity with a greaterlikelihood of enjoying a successful outcome. Of particular interesthere, are property owners unable to obtain adequate insurance, but whononetheless live in an area known to be subject to destructive naturalevents. Such property owners will have an interest in gaining an abilityto predict natural events, so as to be better able to protect theirproperty interests and to offset unforeseen damages.

Examples of external objective independent information sources includethe National Hurricane Center and the Tropical Prediction Center forhurricanes and other tropical storms.

Low-pressure tropical weather systems, or storms beginning at sea, startas relatively low energy thunderstorms. If a moving area ofthunderstorms in the tropics maintains its identity for 24 hours ormore, the weather system is termed a “tropical disturbance”. If theweather system exhibits a rotating or circulating weather pattern, theweather system is referred to as a tropical cyclone. The lowest energytropical cyclone is termed a “tropical depression” if its maximumsustained wind speed does not exceed 38 mph. For maximum sustained windspeeds ranging between 39 and 73 mph, the weather system is termed a“tropical storm”. The most intense weather systems are referred toeither as “hurricanes” or “typhoons”.

According to the National Hurricane Center, “hurricane” is a name for atropical cyclone that occurs in that oceanic area generally referred toas the Atlantic Basin or the eastern Pacific, and which is defined bymaximum sustained wind speeds of 74 mph or more. “Tropical cyclone” isthe generic term used for low-pressure systems exhibiting rotationalcharacteristics that develop in the tropics and meet a criterion forrelatively high maximum sustained wind speeds. The intensity ofhurricanes is measured according to the Saffir-Simpson scale (categories1 to 5).

It is well known that hurricanes and lesser storms develop from tropicaldepressions in the oceans where weather related factors cooperate toform and contribute energy to a low-pressure weather system. The weathersystem then travels across the ocean, along an unpredictable path. Ofinterest here are weather systems exhibiting circulating behavior whichgrow in intensity so as to develop into hurricanes which travel with agenerally westward direction component and make landfall or otherwisecontact property along well-defined geographical areas, such as theeastern coast of Canada, the United States, Mexico, and South America aswell as sea islands lying in a path of travel toward those land bodies.The class of storms referred to as “hurricanes” vary in intensity andare generally free to travel along their own unique pathway or “track”.Hurricanes are observed by independent expert agencies of the UnitedStates government, such as the National Hurricane Center (an example ofan external objective information source), which carefully records,analyzes and later publishes reports, findings and conclusions, whichare made available to the public.

Hurricanes are powered by the sea's thermal energy and by energy in theatmosphere. Generally speaking, hurricanes are directed by the easterlytrade winds. Around the center, core or “eye,” wind speeds accelerate togreat velocities. Moving ashore, these energetic winds displace theocean inwardly, toward land and are known to spawn tornadoes and producetorrential rains and floods. In the Atlantic Basin, for example,statistically there are 8.6 tropical storms for the years 1886-1998. Ofthese, 5.0, statistically, are hurricanes. The above illustrates aspectsof natural events which may be employed in a rules database or programor other structure to govern operation of financial activity.

It is important to define early on those natural events which willqualify for consideration by the financial activity. For example,hurricanes considered by the financial activity may be limited to onlythose hurricanes which make terrestrial contact or which have a minimumstrength. In another example, it is important to define natural eventsconsidered by the financial activity when the members of the public mayhave alternative definitions which vary from those to be considered bythe financial activity. For example, participants who suffered damageduring the time of a tropical cyclone may not fall within the“best-track” or other report issued by an external, independent,objective information source (such as NHC/TPC) (information employedaccording to one of the possible rules of operation). Contrary topopular expectations, a particular participant may suffer damage fromnatural phenomena lying outside of the tropical event of interest to thefinancial activity.

Examples of Financial Activity Models

The present invention contemplates that different types of financialactivities will be carried out, typically between a financial activityprovider and one or more participants in the financial activity.Different models of financial activities according to principles of thepresent invention are contemplated, including:

1. Lotteries or other games of chance, such as those activitiesmonitored by state and local governments.

2. Games of skill, preferably where the participants are obliged todemonstrate a level of skill which pertains to the natural events ofinterest.

3. Property value protection, particularly financial activities in whichthe participants are screened for eligibility to engage in the financialactivity, depending upon some indication of their property rights in ageographical area covered by the financial activity.

4. Derivative tradings type of financial activity, such as thoseactivities directed to derivative securities interests, which aretypically monitored by the Securities And Exchange Commission or otheroversight bodies, such as the Commodity Futures Trading Commission (anindependent agency of the United States government), the New York StockExchange, the Chicago Mercantile Exchange, the Iowa Electronic Market,and others.

5. Secondary trading of financial assets developed by a participant ofone or more of the financial activities indicated above, particularlysecondary trading between a participant of an ongoing financial activityand a third party wishing to deal directly with the participant, ratherthan the financial activity provider. The financial activity providermay require registration of the secondary trade or impose other controlsover the parties involved, including assistance with executing the tradebetween two or more participants or nonparticipants, such asregistration of the instruments traded.

6. Price-oriented competition, preferably in games of skill whereparticipants are charged an “entry fee” to engage in skillfulcompetition with other participants. The distribution or “prize” toqualifying participants is predetermined at the outset of competition,and accordingly is not affected by variability factors. However, ifdesired, the “entry fee” can be adjusted by variability factors such asthose relating to the time interval between investment and eventoutcome, and the probability of a successful outcome determinedapproximately at the time of investment.

Financial Activity Network

Referring now to the drawings, and initially to FIGS. 1-4, financialactivity system 100 in one instance, takes the form of a financialactivity network generally indicated at 10. In one example, network 10includes a central managing system 12 linked to a plurality ofparticipant terminals 14-18. The terminals can comprise, for example,virtually any device that provides communication with a workstation suchas a network or other computers including desktop, portable, lap-top ormainframe computers, data terminals, dumb terminals, personal digitalassistants, cellular phones or other electronic devices havingcommunications capabilities. The present invention contemplates that,throughout the description given herein, “computer” refers to a computersystem comprising one or more computing devices.

As schematically indicated in FIG. 1, each of the participant terminalscommunicate directly with central managing system 12 via communicationnetwork components 15, allowing concurrent transactions and datatransfers to occur. Other types of arrangements are possible. Forexample, communications between the central managing system and theparticipant terminals can employ virtually any communications technologyknown today. The geographical spacing between the central managingsystem and the participant terminals can have virtually any scaledesired. For example, the entire network 10 can be located in a singleroom, or in a single building or building complex or campus.

As will be seen herein, financial activity can take place according todifferent models. One model is directed to a derivative tradings type offinancial activity, such as those activities directed to derivativesecurities interests. In this type of financial activity, the centralmanaging system 12 preferably comprises a brokerage system communicatingwith an exchange system. Preferably, participants' trading is conductedthrough the brokerage system before being conducted with the exchange.If desired, in this type of financial activity, the brokerage system canbe omitted with participants dealing directly with the exchange system.If desired, the central managing system can either be incorporated into,or be provided in addition to, the exchange system.

Alternatively, the financial activity network 10 can be located atvarious nationwide or international locations, as may be desired. As afurther alternative, the financial activity network may take on anyform, and may employ wire, cable or wireless components, for example.Network 10 can be configured as an open connection or network such asthe Internet network, a wide area network, a telephone network, asatellite network, an on-line network or a closed circuit televisionnetwork or the like intra-facility network. Network 10 can also take theform of an Ethernet arrangement, a token ring, a token bus or any othersuitable communications arrangement or configuration that can linkworkstations, particularly workstations including one or more dataprocessing computers.

The present invention expressly contemplates that financial activitycan, but need not necessarily take place either within or across local,state, federal, national or international boundaries. For example,participant terminals can be located in one or more boundaries, e.g.,political boundaries different from that of the central managing system.As a further example, although the central management system and theparticipant terminals are located within a given boundary, e.g., a givenpolitical boundary, the central management system may communicate withexternal objective, independent information sources, external creditagencies or other agencies located within one or more differentpolitical or geographic boundaries.

The terminals can comprise one of the many different types of electronicdevices known today, including a programmable computer, a telephone, astand-alone machine such as an ATM machine, a television or a set-topbox unit, a credit card reader, a kiosk terminal, a point-of-purchaseregister, or a stand-alone unit resembling an arcade game, for example.The terminals preferably include an input device suitable for receivinga purchase request or other data from a participant, such as thoseemployed by purchasers to obtain goods and/or services from a merchant.The input devices can take many forms, including a keypad, keyboardtouch screen or mouse or a remote control device, contactless paymentsystem, or fingerprint or other biometric system, for example. Systems,articles and apparatus contemplated by the present invention preferablycomprise digital devices, but could also comprise analog or hybridelectronic or non-electronic devices, as may be desired.

System Apparatus

Turning to FIG. 2, financial activity system 100 includes systemapparatus 13 embodying the central managing system 12 shown in FIG. 1.In one example, system apparatus 13 comprises one or more storagedevices 20, one or more processors 22, and one or more interfacecomponents 24. The processor 22 in one example comprises a centralprocessor unit (“CPU”). The processor 22 executes one or moreinstructions of one or more programs 30, under control of an operatingsystem 35 employing one or more system programs 37. The program 30 inone example comprises one or more subroutines and one or more variables,as will be understood by those skilled in the art. The storage device 20in one example comprises at least one instance of a recordable datastorage medium, as described herein. The storage device 20 stores theprogram 30, and one or more databases 32, and one or more data files 34.

The interface component 24 in one instance comprises a graphical userinterface (“GUI”). In one example, the interface component 24 allows aservice provider or other user 38 to execute one or more programs 30.The program 30, in one example, comprises one or more subroutines, tocarry out the financial activity methods and operations to be describedherein. In one instance, program 30 includes one or more subroutines tocollect, publish, interpret or otherwise process information whichsupports principles and other aspects of operation of the financialactivity. In another instance, program 30 includes one or moresubroutines for implementing rules of operation for the financialactivity.

In another example, the interface component 24 allows the user 38 toverify or otherwise interact with one or more results of the program 30.In yet another example, the interface component 24 allows the user 38 toset one or more input values or operating parameters for the program 30.In the preferred embodiment illustrated in FIG. 2, interface component24 includes a display device 42 and a data input device 44 which allow auser 38 to set up the central managing system according to desiredoperating objectives. With the interface component 24, a user canaccess, read or write to the program 30, the databases 32 and the datafiles 34.

Included in the apparatus 13 embodying system 12 is a communication port50 which provides two-way communication with the terminals 14-18.Communication port 50 can employ virtually any communications protocol,data format and other organizational, communication or other knowncontent that is in use today. It is generally preferred that thecommunications network employed between the central managing system andthe participant terminals comprise an interactive device taking anysuitable form.

The financial activity system 100, in one example, comprises a pluralityof components such as one or more of electronic components, hardwarecomponents, and computer software components. A number of suchcomponents can be combined or divided in the financial activity system100. An exemplary component of the financial activity system 100 employsand/or comprises a set and/or series of computer instructions written inor implemented with any of a number of programming languages, as will beappreciated by those skilled in the art. The financial activity system100 in one example comprises any (e.g., horizontal, oblique, orvertical) orientation, with the description and figures hereinillustrating one exemplary orientation of the financial activity system100, for explanatory purposes.

The financial activity system 100 in one example employs one or moremachine (e.g. computer)-readable (hereinafter “computer-readable”)signal-bearing media. The computer-readable signal-bearing media storesoftware, firmware and/or assembly language for performing one or moreportions of one or more embodiments of the invention. Examples of acomputer-readable signal-bearing medium for the financial activitysystem 100 comprise a storage component such as the one or more storagedevices 20. The computer-readable signal-bearing medium for thefinancial activity system 100 in one example can comprise one or more ofa magnetic, electrical, optical, biological, and atomic data storagemedium. For example, the computer-readable signal-bearing medium cancomprise floppy disks, magnetic tapes, CD-ROMs, DVD-ROMs, hard diskdrives, and electronic memory. In another example, the computer-readablesignal-bearing medium comprises a modulated carrier signal transmittedover a network comprising or coupled with the financial activity system100, for instance, one or more of a telephone network, a local areanetwork (“LAN”), a wide area network (“WAN”), the Internet, and awireless network.

Data Structures

With reference to FIGS. 2-4, the databases 32 in one example comprise aparticipant database, an administrator or system database, a creditprovider's database, a storm watch database, a rules database and a pushdatabase. The credit provider database contains a list of creditproviders and their accepted methods of payment, as well as any creditrelated information of any type, such as authorization codes usuallyprovided to merchants or the like to authorize transactions acceptableto a credit provider. The credit provider database may also containother financial information associated with the credit provider, such asthe credit provider's identification number and account information. Inthe preferred embodiment, the system administrator in one aspectprovides services similar to that of a merchant selling goods and/orservices to participants. If desired, the system administrator cancomprise a reseller of goods and services such as proprietary weatherreports and cartographic or weather information, as well as maps, formsand other materials relating thereto.

The participant database maintains a list of participants and theirassociated personal financial information. The participant databasestores a set of personal payment methods which are registered by theparticipant with a transaction processing service, which in thepreferred embodiment, is engaged by the system administrator as anaccommodation to the participant. The participant database furtherincludes information regarding the eligibility of participants toparticipate in the financial activity. In the preferred embodiment, thesystem administrator employs a known screening service to enforce thoserules set down pertaining to restrictions on participation. For example,the system administrator may choose to implement requests by governmentofficials to curtail or otherwise limit transactions originating in orcommunicated to those areas subject to an evacuation order or one ormore legal restrictions. Further details concerning an exemplaryscreening service is provided in U.S. Pat. No. 6,508,710, issued Jan.21, 2003, the disclosure of which is hereby incorporated by reference inits entirety.

The storm watch database tracks storm activity of interest toparticipants. Included, for example, are circulating storm systems whichhave not yet matured into hurricanes, but which have the potential fordoing so. If desired, historical data concerning previous storm systemsmay be made available to participants, either on an unrestricted basisor at additional cost to the participant.

The administrator database contains data and other information needed tooperate the financial activity. Included, for example, are ongoing“real-time” or “moving” totals of the number of participants, the totalof all funds invested, the number of other participants which share aparticipant's prediction choice, and the amount of funds invested by theother participants. If desired, the administrator database can alsoinclude real-time estimates of payout amounts corresponding to theparticipant's prediction choice, assuming that the choice proves to beaccurate. The administrator database can also include a list of knownusers who are to be barred from participating or otherwise restricted intheir participation activity. This information can be contained in aseparate database, if desired. Also, the administrator databasepreferably contains participation statistics and financial statistics,useful in providing an updated estimate of the cost of doing businessfor operating the financial activity. If desired, adjustments to coverfluctuations in overhead costs can be made with regard to futureparticipants.

The rules database contains rules or other principles of operation forthe financial activity. The rules database contains a set of “rules” orprinciples which govern the ongoing financial activity, in a specific orin a general way (e.g. rules defining the authorities, or externalobjective independent information sources to be relied upon for a final,factual decision or conclusion). Examples of such authorities includeexpert governmental agencies responsible for monitoring natural events.The rules also include eligibility requirements, personal financialpayment requirements, and sliding scales affecting payouts such astiming and deadlines.

The rules may be wholly or partially public (i.e. available toparticipants) or private (i.e. available only to those authorized by thesystem administrator). In one instance, the rules database also governsthe course of conduct of specific aspects of the financial activity. Forexample, in one instance, the rules include definitions relating to thenatural events to be considered by the financial activity, the externalobjective independent information source which manages information anddeterminations concerning a natural event which will be relied uponduring the course of conducting the financial activity, parametersassociated with the natural events, especially those parameters whichare used to uniquely define each particular natural event as well asparameters for determining remuneration points or other value.

If desired, the points or other value pertaining to the participant'sremuneration can be “hidden” or incorporated within a calculation, andneed not be expressed in an explicit reference. In another instance, therules database contains definitions of those participants eligible toengage in the financial activity, as well as those participants whichqualify as finalists (“winners”) eligible or who otherwise qualify forremuneration. In a further instance, the rules database containsprinciples of operation governing funds transfers between the financialactivity and qualifying participants. The rules database may also governaccess that a participant has to certain information concerning thefinancial activity, such as the number of individuals participating, theaverage or largest financial investments currently being made, and theraw total of funds currently collected for the event of interest.

In another instance, the rules database can include principles ofoperation relating to safety and public interest considerations. Forexample, the rules database can provide for automatic suspension ofoperation upon public announcement of an evacuation order orrecommendations to prepare to evacuate a particular area. The rulesdatabase can provide for selective activity based upon the location ofthe participants. For example, suspension of financial activity can belimited only to those counties or other areas where government safetywarnings have been issued, while allowing financial activity to continuefor those areas not affected by the government warnings.

The push database contains information useful for generating interestand encouraging participant activity. For example, push data can includerecent designations of officially recognized storm systems that maybecome candidates for future investment opportunities. Push data canalso include brief analyses and/or statistics of ongoing or recentnatural events. Different amounts of push data and different lists ofpush participants can be set up by a computer program according topre-defined “trigger levels” such as storm location, intensity andspeed, for example. The push database can also include rules ofoperation pertaining to push data, such as local times during which pushdata is or is not sent.

The data files comprise data information which, preferably, isrelatively static, such as the official designations of natural eventsto be issued in an upcoming activity season, official and unofficialhistorical reporting of natural events activity and statistics compiledfrom historical information, for example. This historical data can becombined with climatological probabilities to determine investment priceand/or payouts. If desired, the data files can be replaced by one of theavailable databases, or a special database can be provided, if desired.

A land area database can contain geographic items such as maps and otherdata relevant to conducting a financial activity. For example, in theUnited States, maps can be provided for those states at risk to ahurricane strike. Preferably, the maps would be “clickable” to allow aparticipant to readily indicate the state of interest. In response, moredetailed maps such as maps of the counties within the state would bedisplayed to the participant and again, would be clickable to provideready indication of the participant's choices of predicted strike areas.If desired, this same functionality can be provided in table form orsome other form convenient for user participation. In addition, a crossreference “finder” tool can be provided to receive zip code informationor the like, and return with a colored or other visually distinctivearea on the displayed map, or a textual response to the inquiry, readyfor the participants' selection to the indicated. As mentioned, it isgenerally preferred that the maps, tables, or other geographic locationinformation contain a visual indication of those areas which lie outsideof the financial activity, providing a ready indication of ineligibilityto participants surveying their possible choices for a prediction entry.If desired, the geographic location data can be linked to meteorologicalor climatological data for the given area.

A weather database is preferably provided for weather, meteorological orclimatological information. The weather database preferably containshistorical information helpful to those preparing a prediction of futurenatural events.

Participant Terminals

Turning now to FIG. 3, terminal apparatus 58 comprises one or more ofthe participant terminals 14-18 and includes a communications port 60,one or more processors preferably comprising a central processing unit62 and a memory storage unit 64. Also included is an interface component68 which preferably comprises a display 70 and a data input device 72.Interface component 68 allows a participant or other user 76 tocommunicate with apparatus 58 and in turn with apparatus 13 of thecentral managing system 12.

Turning now to FIG. 4, terminal apparatus 80, comprising another exampleof the participant terminals, includes a communication port 60, one ormore processors preferably comprising a central processing unit 62, amemory storage unit 64 and an interface component 84. In the arrangementillustrated in FIG. 4, interface component 84 includes, in addition to adisplay 86 and a data input device 88, a card read/write device 92 andan output device 94 for dispensing a printed receipt, confirming aparticipant's transaction.

With additional reference to FIGS. 5-6, two additional examples ofparticipant terminals are shown. With reference to FIG. 5, participantterminal 200 is shown comprising a display 202 for presentinginformation about the selected natural events, a user interfaceintegrated with the display for viewing event information and placinginvestments on a selected natural event, an optional card read/writedevice 206 for receiving an electronic or magnetic-stripe card encodedwith a participant's account information, an optional ticket dispensingdevice 210 for providing a ticket comprising purchase information for aselected natural event and a housing 214 for retaining the display, theuser interface, the card read/write device and the ticket dispensingdevice.

The participant terminal 200 also includes a processor and may alsoinclude a speaker (not shown) for playing audio associated with thefinancial activity information. The display preferably comprises a CRTor a flat screen display 218 for displaying information regarding thenatural events and preferably, the display comprises a touch-sensitivedisplay, including a touch-sensitive membrane (not shown) incommunication with the processor for selecting the desired investmentinformation such as the desired investment shares, as well as“scrolling” between next and previous information. As will be apparentto those skilled in the art, any appropriate type of display may beused.

Turning now to FIG. 6, another embodiment of the at least oneparticipant terminal, generally indicated at 230, is shown comprising adisplay 232 for presenting information about the selected natural event,a user interface 236 for viewing event information and makinginvestments, an optional card read/write device 240 for receiving anelectronic or magnetic-stripe card encoded with a user's accountinformation, an optional ticket dispensing device 242 for providing aticket comprising investment information for a selected natural eventand a stand-up type housing 250 for retaining the display, the userinterface, the card read/write device and the ticket dispensing device.The participant terminal also includes a processor (not shown) forfacilitating financial activity. The participant terminal 230 may alsoinclude a speaker (not shown) for playing audio associated with thefinancial activity information. The examples shown in FIGS. 5 and 6 areonly exemplary implementations for the at least one participantterminal, and other configurations are also contemplated. For example,the user interface may include a plurality of hardware or softwarebuttons, each identifying different functions for facilitating variousaspects of the financial activity.

Central Managing Apparatus

The central managing apparatus 13 and the participant terminal apparatus(together, referred to as “the apparatus”) in one example comprise aplurality of components such as one or more of electronic components,hardware components, and computer software components. A number of suchcomponents can be combined or divided in the apparatus. An exemplarycomponent of the apparatus employs and/or comprises a set and/or seriesof computer instructions written in or implemented with any of a numberof programming languages, as will be appreciated by those skilled in theart. The apparatus in one example comprises any (e.g., horizontal,oblique, or vertical) orientation, with the description and figuresherein illustrating one exemplary orientation of the apparatus, forexplanatory purposes.

The apparatus, in one example, employs one or more computer-readablesignal-bearing media. The computer-readable signal-bearing media storesoftware, firmware and/or assembly language for performing one or moreportions of one or more embodiments of the invention. Examples of acomputer-readable signal-bearing medium for the apparatus comprise thestorage components 20, 64. The computer-readable signal-bearing mediumfor the apparatus in one example comprises one or more of a magnetic,electrical, optical, biological, and atomic data storage medium. Forexample, the computer-readable signal-bearing medium may comprise floppydisks, magnetic tapes, CD-ROMs, DVD-ROMs, hard disk drives, andelectronic memory. In another example, the computer-readablesignal-bearing medium may comprise a modulated carrier signaltransmitted over a network comprising or coupled with the apparatus, forinstance, one or more of a telephone network, a local area network(“LAN”), a wide area network (“WAN”), the Internet, or a wirelessnetwork.

Graphical User Interface

Turning now to FIGS. 7 and 8a-8f, and initially to FIG. 7, program 30includes one or more subroutines for communicating with a participantlocated at a remote participant terminal. In one instance, program 30includes one or more subroutines for generating one or more screensperforming a number of functions, including sending information to aparticipant, and receiving information from the participant. In FIG. 7,window or screen 300 schematically represents a summary screen forparticipant John Doe, as indicated at 310. As mentioned, screen 300 is asummary screen, and works with a number of supporting screens whichquery the participant for specific information such as the participant'sname, and receives responsive information which is then reviewed forform and content, recorded in one or more databases such as theparticipant database, and is reported in the area 310.

Other supporting screens receive other participant applicationinformation, such as the participant's location of residence or locationof other property holdings, along with information regarding theparticipant's credit information. Upon reviewing the participant'scredit and other qualifications, an account is opened for theparticipant and details concerning the account, credit qualificationsand other related financial information are stored in one or moredatabases, such as the participant database. The summary screen 300 isthen presented to the participant, confirming the participant's activestatus in the financial activity. During this process, one or morequeries, multiple-data choices, multiple activity choices or otherinteractions with the participant are listed in the area 314. Ifdesired, each choice presented to the participant can have an adjoiningcheckbox 318 provided for the ready data input into program 30. Ifdesired, one or more command buttons 320-330 can be provided for theuser, to execute one or more commands or otherwise control some portionof data is stored in one or more databases, or to control some portionof program 30 allocated to the participant by the system administrator.If desired, area 334 can be provided to display context-sensitive rulesof play to the participant, or to provide appropriate prompts or otherhelpful information. If desired, checkboxes 336 can be provided adjacenteach entry in window or pane 334 to allow the participant to obtainfurther information related to the topic of interest.

In the area 340, the participant is alerted to the current operationbeing performed by program 30. If desired, a sequence of operationsappearing in area 340, along with appropriate responsive indicationsfrom the participant may be listed in area 344. If desired, informationin area 344 can be saved or printed using command buttons 328, 330, thusaffording the participant the opportunity to obtain a written record ofthe activities in either electronic or printed paper form.

Turning now to FIGS. 8 a-8 f, a series of exemplary data input screensare shown in schematic form. These screens pertain generally to theselection of the locations chosen by the participant for investment. Forexample, if the natural event is a hurricane, the location may be theparticipant's prediction of where a hurricane strike will maketerrestrial contact. If the natural event is a tropical storm, thelocation may be the epicenter of the storm's strike. If the naturalevent is a tropical cyclone, the location may be the point of landfall,or a point along the over land track of the tropical cyclone. Landfallcan be defined in any number of ways. For example, landfall can bemeasured using the center of the eye of hurricane, or the eye wall ofthe hurricane or different portions of the structure of the hurricane.Referring to FIG. 8 a, a screen 400 presents a map 402 of a land area,which is preferably subdivided into smaller portions, each of which mayeither be selectable by the participant or shaded, or otherwise madevisually distinctive to the participant so as to indicate an area whichis not eligible for the financial activity.

If desired, the rules stored in one or more databases may providefurther information regarding this topic of ongoing activity.Preferably, each subdivided portion of map 402 is selectable by touchscreen, click and point, or by an input pen device, for example. It isalso preferable, in one instance, that the area 406 selected by theparticipant is shaded, colored, or otherwise made visually distinctiveso as to indicate graphically the choice made by the participant. InFIG. 8 a, area 406 is chosen by the participant and receives adistinctive contrasting color value to provide visual feedback to theparticipant. As indicated in FIG. 8 a, the screen 400 also includes aquery to the participant to confirm and finalize the choice of location.

Turning now to FIG. 8 b, screen 410 is presented as a prompt to theparticipant to expand the indicated area so as to include one or moresurrounding areas. In screen 410, an enlarged area 412 surrounding theinitial chosen location 406 (the “collar countries”) is made to flash orblink on and off or undergo a color change. An optional text message ispresented to draw the participant's attention to the advantages ofenlarging the selected location in which a natural event strike ispredicted to occur. The participant can indicate additional locations byshift-clicking, for example.

In one instance, it may be desirable to establish a rule of playallowing the use of so-called secondary parameters. These secondaryparameters require a participant to select not only a location of strikeby a natural event, but also to indicate some characterizing factorassociated with the natural event, such as strength of the tropicalstorm measured according to a numerical category value, according to theSaffir-Simpson scale, for example. Another example of a secondaryparameter for a tropical storm could be the strength of the storm, andsuch is contemplated in FIGS. 8 c-8 f. Referring to FIG. 8 c, screen 420provides notice to the participant that a secondary parameter is to beprovided, in addition to the strike location. In FIG. 8 d, a pull-downwindow 424 is provided in screen 426 to indicate a range of values to bechosen by the participant as the predicted category strength of thehurricane strike. In FIG. 8 e, it is assumed that a participant haspreviously enlarged the area of strike location to be covered by thechosen investment or “stake”. In screen 430, the participant's choice ofcategory 2 is confirmed along with an invitation to spread theparticipant's stake in category strength, as well as in land area. InFIG. 8 f, a screen 440 shows the participant's selected range ofcategory strength. Following, is a screen (not shown) which summarizesthe participant's stake. For example, for the investment indicated inFIG. 8 f, a user has selected nine geographic areas and three categorystrengths, for a total purchase cost of 27 shares (9 areas×3 strengthvalues). In one instance, it is generally preferred that this summarytotal of shares purchased is reported in area 344 of screen 300, shownin FIG. 7.

Methods and Operations

An illustrative description of exemplary operation of the system ispresented, for explanatory purposes. FIGS. 9-12 indicate a series ofsteps to be carried out during the course of the financial activity.These method steps may be implemented in a number of different ways,including, for example, but not limitation, execution of program 30 bythe central managing apparatus 13, and one or more participantterminals. The program 30 may be implemented by either a general-purposecomputer or a special purpose electronic device, for example. The methodsteps may be incorporated into an article of manufacture such as a datastorage device. As will be seen herein, the steps indicated in FIGS.9-12 indicate that portion of financial activity as taken from theviewpoint of the system administrator.

Referring initially to step 500, the financial activity is initiated byvirtually any appropriate means. For example, if the rules of operationprovide that the financial activity begins at a given date and time, thestart step 500 may be implemented in software that monitors the systemclock and executes program code which publishes invitations toparticipants to engage in financial activity as of the referenced dateand time. Alternatively, start step 500 may be initiated by the systemadministrator pressing a key switch or otherwise activating a switch toinitiate transmission to participants indicating that the financialactivity season has been opened. According to certain aspects of thepresent invention, an event season may be related to a single naturalevent or a number of different natural events or a number of portions ofan ongoing natural event. In one instance, an event season is defined bycalendar dates, by a number of occurrences of a defined natural event,or by a mixture of both, or may rely upon a report or otherdissemination of data from an external objective independent informationsource.

In step 502 in addition to announcing the opening of the financialactivity season, an optional offer is made to make available certainrules of operation which govern financial activity for the season ofoperation. In step 504 application information is obtained from theparticipants. This information can include, for example, an indicationof the identity of the participant, the participant's residentiallocation or location of property interests, and the participant's creditinformation needed to allow the system administrator to authorizeopening of an account for the participant. Preferably, the systemadministrator predefines acceptance criteria in the rules which governthe financial activity. These rules may include intervention by anexternal agency, such as an external credit agency from which credit ispurchased by the participant, using the system administrator as abroker, as is currently done by many merchants offering goods orservices for sale.

In step 506, the application information is reviewed and the decisionmade in step 508 is to either accept or reject the participant'sapplication. For example, a participant's application may be rejectedbecause the participant has failed to disclose a property interestneeded to base financial activity on property losses caused byoccurrence of natural events. If the participant's application isrejected, control is passed to step 511 which sends a terminationmessage to the participant and returns control to step 504.

If the participant's application is accepted, control is passed to step510 in which credit information is obtained from the participant. Theparticipant's credit qualifications are reviewed in step 512 and adecision is rendered in step 514 to accept or reject the participantbased upon the added requirements of appropriate credit qualifications.Again, if the participant fails to meet sufficient creditqualifications, control is passed to step 511 which sends a terminationmessage to the participant and then transfers control to step 504. Ifthe decision in step 514 is positive, indicating acceptance of theparticipant's application and credit qualifications, control is passedto step 516 which confirms the active status of the participants withrespect to the financial activity. Such confirmation may be indicated,for example, by a report rendered by screen 300 as explained above, withreference to FIG. 7.

Referring to FIG. 10, in step 518 the prediction entry is requested fromthe participant. In the step, the participant provides informationdefining the investment to be made. After confirming the unique identityof the natural event, the participant declares the primary parameterinformation which, in one instance, comprises the location of the landstrike predicted for the natural event. Thereafter, the participantdeclares any secondary parameters required by the rules of operation,such as the severity of the strike, and the strike duration, forexample. In step 520, the prediction entry and other investmentinformation is obtained from the participant and stored in one or moredatabases, for future reference. In one instance, the time at which theinvestment information is obtained is noted and stored along with theparticipant's investment data. In one instance, the amounts of payout orremuneration to a successful participant is weighted according to theamount of time between the investment transaction and occurrence of theevent, with greater time durations being weighted more favorably, on thepremise that later investments have the benefit of accumulated knowledgewhich will benefit the ability to predict occurrence of an event.

The investment information is reviewed in step 522 and judgment is madein step 524 as to whether the investment information is acceptable ornot. If the investment information is rejected in step 524, control ispassed to step 526 which sends an error message to the participant,passing control to step 518 to repeat the information gathering process.If desired, step 526 can cause relevant information to be offered ordisplayed to the participant to help raise the participant's level ofskill in making a prediction. If desired, the participant can be askedto answer a number of questions relating to the skills involved inmaking a prediction for the particular natural event.

Assuming that the investment information is in the correct form andmeets other automated criteria, control is passed to step 528 in whichthe investment information is recorded along with the current time. Thesystem administrator has the option of determining at what point in theongoing financial activity a participant is deemed to have completed theinvestment process for the purpose of determining the time differencebetween the investment and occurrence of the natural event. For example,the times noted in either steps 520 or 528 (or some other times, ifdesired) can be used. As a further alternative, a system administratormay wish to defer appointing an investment time to the participant untilfunds for the transaction have been obtained from the participant. As aconcession to the participant, the system administrator mayprovisionally appoint an investment time at an earlier step.

Assuming the investment information has been successfully obtained andrecorded, control is passed to step 530 in which necessary funds arecollected from the participant. If desired, the participant's ability topay can be guaranteed before hand to eliminate any time delay at thispoint in the ongoing financial activity. In step 532, the participant'sinvestment is confirmed by an entry to the summary screen 300, forexample. With reference to FIG. 11, control is then passed to step 534in which contact is made with an external objective independentinformation source that observes the natural event and managesinformation concerning the natural event and optionally, renders relateddecisions, such as assigning a severity level according to establishedscales of measure.

Generally speaking, it is preferred that the system administrator not berequired to render decisions concerning occurrence of a natural event,such as primary and secondary event parameters. In one instance, asystem administrator provides in the rules of operation that a financialactivity will rely upon a designated external objective independentinformation source for information concerning the occurrence andcharacteristics and other parameters of natural events upon whichinvestments are to be based. In step 534, connection to an externalobjective independent information source may be initiated oralternatively, data from the external objective independent informationsource previously obtained may be accessed for use by the financialactivity. In step 536 updates to ongoing developments received from theexternal objective independent information source may be posted for thebenefit of existing and prospective participants. In one instance,updates are made on an ongoing “live” basis, either with little or notime delay, or at a minimum, at a time prior to closing of a naturalevent.

In step 538, information from the external objective independentinformation source is queried to determine if the external objectiveindependent information source has established start of a natural eventof interest to the financial activity. If an event has not yet started,control is passed to step 536. When the external objective independentinformation source determines that an event has started, a uniqueidentifier for the natural event is assigned and recorded to one moredatabases. In one instance, the unique identifier is thereafterassociated with each investment by a participant concerning the naturalevent. In step 540, the start of the event is reported to theparticipants and the time of event starting as “officially” determinedunder rules of the system administrator is posted or otherwise madeavailable to participants, and is recorded in one or more databases forpossible future reference by the financial activity. In step 544, if theevent has not yet closed, continuous updates regarding event progressare obtained and in one instance, are reported or otherwise madeavailable to the participants.

Once an event has closed, control is passed to step 546 to determine iffinancial activity has ceased. In one example, the system administratorprovides the rules of operation defining the starting and ending timesfor a financial activity season. This can be based upon an arbitrarydate and time, or upon occurrence of a particular event, such asoccurrence of the fourth, fifth, or sixth tropical cyclone since theseason opened. In one instance, closing of one season may be followed byan immediate or delayed opening of a subsequent season. For example, asubsequent season can be declared by the system administrator toaccommodate financial investments based upon occurrence of the fourth,fifth or sixth tropical cyclone occurring in a given hurricane season,as defined by the National Hurricane Center, for example.

Referring to FIGS. 11 and 12, if it is determined in step 546 that aseason has ended, the season of financial activity is closed in step 548and accumulated data and other information is reviewed in step 550 todetermine and identify the finalists which have made successfulpredictions concerning the natural event, as provided in the rules ofoperation for the financial activity. In step 552 a number ofcalculations are made in preparation for making payouts to thesuccessful finalists. In one instance, calculations are made todetermine the total funds holdings, the remuneration points perfinalist, the administration and operating fees associated withconducting the financial activity, and the amounts of remuneration fundsfor each finalist. Remuneration points, in one instance, are basedsolely upon the primary parameter, which is preferably the strikelocation of the natural event. In another instance, remuneration pointsare determined not only by the strike location but by other naturalevent parameters, secondary or otherwise.

In one instance, a single primary parameter is defined by the systemadministrator in the system rules of operation. In another instance, oneor more secondary parameters are also defined in the system rules ofoperation. In a further instance, secondary parameters are assigned alesser weighting than the primary parameter. In any event, the primaryand secondary parameters, if any, can have equal or unequal weighting,as may be desired. In one example, relating to hurricane events,location of the hurricane's strike is defined as a primary parameter,with time delay between the investment time and the time of thehurricane strike at the investment location being defined as a secondaryparameter.

In one instance, the time delay secondary parameter is weighted lessthan the primary parameter. In another instance, severity of the naturalevent at the predicted location declared by a participant is defined asa tertiary parameter, and the secondary and tertiary parameters areassigned unequal weighting. The present invention contemplates thatremuneration points are determined according to a mathematical formula,algorithm or other operation which does not require human interventionat the time of execution. Thus, the formula, algorithm or otheroperation may be incorporated in an analog or digital electronic circuitor a hydraulic circuit, for example. If desired, and especially withfinancial activity providing a hedge against property losses,remuneration points may be determined, contingent upon or otherwisebased upon confirmation of the participant's property interests.

In step 554 the remuneration funds are paid out to the successfulparticipants, or finalists. In step 556 the financial activity isclosed.

The steps or operations described herein are just exemplary. There maybe many variations to these steps or operations without departing fromthe spirit of the invention. For instance, the steps may be performed ina differing order, or steps may be added, deleted, or modified.

In addition to the above, other types of activities are contemplated bythe present invention. As mentioned above, a participant may elect tocontact a system administrator or other service provider to engage in afinancial activity. Investments are paid into a system account topurchase shares in the financial activity. Assuming a participant'sactivities are successful and perhaps if certain qualifications are met,payouts are made from the system account to the participant. The presentinvention also contemplates other types of transactions. For example,shares purchased in the course of the financial activity can either beuniquely assigned to a participating individual, or they can be madefreely transferable. Accordingly, a financial activity may be organizedsuch that either payouts must be made to the participant making theinvestment or payouts can be made to any individual possessingsufficient identification, such as an account number and password.

The present invention also contemplates, in either example, that theinvestment positions referred to herein as shares or stakes can bebought and sold between various parties, either with or withoutinteraction with personnel associated with the financial activity. Ifdesired, the aftermarket activity in shares transfer can be offered bythe operator of the financial activity as a service to members of thepublic. In any event, the financial activity, from investment to pay outwould be carried out by operators of the financial activity. In anotherembodiment, the present invention also contemplates that financialactivities would be carried out between two or more participants withthe operator of the financial activity providing a service thatfacilitates financial interactions between the parties involved.

Variability Factors

The present invention contemplates the use of different factorsaffecting price and/or payout of the financial activity. By way ofintroduction, two considerations are contemplated in one instance, onerelating to probability and the other relating to a calendar or timingof events. In particular, the present invention, in one instance,provides a price or cost variation in the purchase of a unit (otherwisetermed a “share” or a “stake”) representing a quantification of aparticipant's financial investment.

In one instance, assuming a point in time before occurrence of a naturalevent, participants are able to invest in a financial activity at priceswhich are set by the financial activity provider, and which varydepending on time and on one or more probability factors. As a firstcomponent of price variability, the present invention, in one instance,keeps track of the timing of the investment. It should be borne in mindthat investments can be made a long time (e.g. months) before a naturalevent, such as the time a hurricane would be likely to occur. Onepurpose of this variability factor (namely that of timing), is toencourage investments to be made earlier, rather than later. Thisvariability factor, in effect, preferably operates as a price discountfactor, although the variability factor could also be applied to payoutdistributions.

According to the present invention, one or more probability assessmentsare preferably made at the time of a participant making an investment inthe financial activity. One probability assessment preferably takes theform of a probability calculation based on current conditions, of thelikelihood of a “hit,” “successful outcome” or “qualification” that aparticipant's prediction will occur. For situations involving hurricanenatural events, the price of a unit available for purchase by aparticipant at a given time is calculated based upon a probability thatthe county (or other geographical designation for a purchase unit)chosen by the participant will suffer a hurricane strike. If desired,probabilities can be based upon storms other than hurricanes and ifdesired the strength of the storm or other factor can be employed toalter the purchase price at any given time.

As a further consideration regarding probabilities, financial activitiesaccording to principles of the present invention can take into accountconditional probabilities. For example, the average number of hurricanelandfalls on the U. S. in a given year is 1.7. This value is sufficientto define a Poisson distribution, according to conventional techniques,for numbers of U.S. landfalls, which yields a probability of 0.817 thatat least one US landfalling hurricane will occur in a given year.Similarly, from this Poisson distribution, the conditional probabilitythat there will be at least two US landfalling hurricanes, given thatone has already occurred, is 0.620.

In one instance, shares in later funds can be priced more cheaply thanearlier funds according to conditional probabilities of K strikes, giventhat K-1 strikes have already occurred, so that, in addition, prices goup in subsequent funds when an earlier fund closes.

According to another aspect of the present invention, the financialactivity incorporates multiple stages of probability assessment, withdifferent probability treatments being given at each stage. Preferably,three probability treatments are applied to investment price, but couldalso be applied to payout distributions if desired. In a first stage ofprobability assessment, no storms or other precursors to hurricanes arein existence, and the first stage probabilities preferably are based onclimatalogical relative frequencies.

Second stage probabilities are in play where at least one storm existsin the field of interest (e.g. the Atlantic basin) but is far enoughaway from the area of interest (preferably, the coastline of thecontinental United States and adjacent coastlines) that no forecasts ofimminent landfall can be made. Preferably, for hurricane natural events,attention is paid at this stage to tropical depressions, and tropicalcyclones such as hurricanes and to their location and tracks at sea.Preferably, in addition to the distance between the tropical depressionand the area of interest, attention is paid to the historical tracks orpaths of storms in previous years that subsequently made landfall in thearea of interest.

In the third stage, occurrence of a natural event such as the landfallof a hurricane is imminent. It is generally preferred that the existenceof the third stage is declared, based upon an indication of anindependent objective information source, such as the National HurricaneCenter/Tropical Prediction Center. For example, a provider of afinancial activity may look to the issuance of hurricane watches, andespecially hurricane warnings from the National Hurricane Center. Forexample, a hurricane watch is issued when it is determined thathurricane conditions may threaten an area within 24 to 36 hours. At thispoint, preparations may be made for an imminent evacuation, if one isordered. A hurricane warning is issued when hurricane conditions (i.e.maximum sustained wind speeds of 74 mph or more) are expected in aspecified coastal area within 24 hours or less. Local governmentagencies make independent assessments and independently issue evacuationorders for people in the affected areas. Notification of these types ofevents to the financial activity provider can be used to close furtherparticipant activity, or alternatively to trigger a shift from stage twoprobability assessments to stage three probability assessments. The NHCforecasts go out 72 or 120 hours into the future, depending on thenature of the forecast product. It should be noted that in thisscenario, the effect of stage three probability assessments isintentionally weakened by the calendar or the timing variability factor.Since the natural event is imminent, price discounts for unit purchasesis preferably very low or nil. If desired, payout penalties can beassessed for stage three investments because of their close timing tooccurrence of the natural event.

Considerations Regarding Payout

If desired, financial activities relating to hurricane natural eventscan be structured around hurricane landfall or hurricane land tracks,either individually, one exclusive of the other, or in combination. Aquestion arises, for example when a hurricane landfall is made on orclose to a border between two unit areas (i.e. geographical areas, suchas counties used to define purchase units). An arbitrary width can beassigned to the point of landfall if desired, by the provider of thefinancial activity.

The passage of a hurricane over inland geographical areas can raise anumber of different possibilities made available to the provider of afinancial activity. For example, if the National Hurricane Center isdesignated as the external objective independent information source, onereport currently available to providers of financial activities is theso-called “best track” report which issues after a hurricane event isconcluded. The “best track” report defines the inland path of ahurricane according to a table of discrete position values. Thus, it isleft to the provider of the financial activity to determine the best wayto define the hurricane path between published points on the “besttrack” table. If desired, the points of the “best track” table can beconnected by straight lines or by curved lines according to a predefinedcurve-fitting method, for example. As a further possibility, anarbitrary width can be assigned to the hurricane path.

If desired, other sources of information can be employed since the “besttrack” report is not the only possible source of scoring information,and may not be desirable in certain instances because of the time delayassociated with issuance of the report after conclusion of the naturalactivity. For example, the same kind of information (lat/lon and maximumsustained winds) are available in near-real time in what are called“advisories” issued by the National Hurricane Center, which do notsuffer from prolonged time delays. Preferably, the most rapidsatisfactory resolution of the outcome of the natural event ispreferred, so that distributions can be made promptly to individuals whosuffer from the natural event.

Different possibilities are presented when considering a particulargeographical land unit. For example, payout for a geographical land unitcan be based upon one or more external factors, such as a simplehit/no-hit treatment for the land unit of interest. In another example,payout for a land unit of interest can be based upon the publishedstrength of the hurricane according to the “best track” or other table.As a further possibility, it is recognized that the strength of ahurricane can vary in intensity or strength when passing over a givengeographical land unit of interest. The possibility is thus presentedfor a mathematical treatment taking into account the difference ofstrengths at entry and exit points of the hurricane with respect to thegeographical unit of interest. As a further possibility, thegeographical unit of interest can lie between points published on the“best track” table, and some manner of interpolation of values can bemade with respect to the geographical unit of interest. If desired,payouts can be calculated based upon the strength of the hurricane forthe qualifying geographical unit. For example, one payout possibility isto award greater payout for geographical units suffering greaterstrengths of hurricane activity, under the premise that more help willbe provided for those participants that suffer greater damage, asmeasured by hurricane strength.

Variability factors other than those presented above can also beconsidered when calculating payouts to qualifying participants. Forexample, in addition to timing factors and probability factors discussedabove (which are preferably employed for price variability) as well asstrength variability, an account can be made of the residence time of ahurricane in a given geographical unit of interest, under the premiseagain that more help will be provided for those participants that suffergreater damage as measured by the time that a hurricane is present in agiven geographical unit of interest.

Modularity

In one instance, the present invention includes one or more systems, oneor more methods, and/or one or more devices for carrying out thefinancial activity. A number of important issues are addressed by thedatabases and/or program. In one instance, it is a generally preferredthat these issues be addressed as much as possible, on a modular basis.In this manner, a system administrator is able to quickly and easilytailor the financial activity to meet a number of particular needs, andcan modify the financial activity on an ongoing basis, if necessary. Abrief description of some of the “modular” issues will now be given.

1. Definition of an external objective independent agency which monitorsa natural event, measures, observes, or otherwise obtains and recordsdata concerning a natural event, as well as drawing conclusions andmaking analytical determinations concerning a natural event. In oneinstance, it is generally preferred that the external objectiveindependent agency be independent of the participant's financialactivity, and in another instance be readily observable by the public,or at least the participants. For example, the external objectiveindependent agency can comprise a unit of the United States governmentwhich routinely makes public announcements and which is subject toFreedom Of Information inquiries from members of the public.

2. Definition of an event eligible for payout. For example, relating tohurricane natural events, it is generally preferred, in one instancethat the event be “officially” declared a “hurricane” as defined by theNational Hurricane Center. However, in other instances, other recognizedpre-hurricane stages can be treated by the financial activity, with orwithout weighting the points upon which payout is based. In oneinstance, payout for the financial activity can be based upon anoccurrence of a natural event or a termination of a natural event.

3. Definition of participant eligibility needed to be permitted toengage in the financial activity. Included, for example, is the level ofskill of the participant (needed, to qualify to participate in afinancial activity structured as a game of skill), or the propertyrights of participant (needed, for example, to qualify to participate ina financial activity structured as a vehicle for recouping losses toproperty rights caused by a natural event).

4. Definition of a “season” for the financial activity. The financialactivity season can, for example, coincide with a particular timeinterval such as a “hurricane season” as defined by the NationalHurricane Center. In another instance, the financial activity season canbe chosen to lie outside of a recognized or customary time period suchas the National Hurricane Center “hurricane season” and that this ispreferred for hurricane natural events.

5. Number and length of financial activity seasons in a given year. Inone instance, there can be but one financial activity season. In oneinstance, the financial activity season can begin at the beginning of acalendar year. In another instance, the financial activity season canbegin at any time during a calendar year. In one instance, the length ofa financial activity season can be a predefined number of naturalevents. In another instance, a financial activity season can be definedto comprise a predetermined number of natural events, which is eitherconcluded or is followed by a subsequent financial activity season uponthe occurrence of those predetermined number of natural events.

6. Defining the types of natural events and activities upon whichpayouts are based. For example, for hurricane events, recognizedactivities can include coastal strikes, inland strikes and near-shorehurricanes which do not make landfall (such as hurricanes which comewithin one quarter mile of eligible coastal shore). Other definitions of“sub-characteristics can be made for other types of natural events,other than hurricanes.

7. Defining areas or regions eligible for inclusion in the financialactivity. In one instance, only terrestrial areas or regions may bedeclared eligible for inclusion in the financial activity. In anotherinstance, the terrestrial areas or regions eligible for inclusion in thefinancial activity are geographically defined according to convenientdelineations, such as established political boundaries. In a furtherinstance, portions of geographic regions can be declared ineligible forinclusion (for example, some of the many island areas of the EasternSeaboard of the United States can be declared ineligible for inclusion,because of small size, few or no inhabitants, or for other reasons whichare or are not stated).

8. Defining the areas stricken by a natural event. In one instance, thestricken areas can be defined according to external objectiveindependent agencies such as the National Hurricane Center. In oneexample, stricken areas eligible for the financial activity includethose areas as defined by the National Hurricane Center “best-track” orother, interim reports which are typically published either during orshortly after the conclusion of a hurricane event. In one instance, thesize or width of the National Hurricane Center “best track” (preferably,of the center of the eye of the hurricane) can be infinitely thin, or itcan be of a predetermined width. In one instance, stricken areaseligible for the financial activity can be calculated by connectingpoints given in the National Hurricane Center table data of ahurricane's “best-track” or other table with either a straight line, ora curved line preferably defined by a predetermined curve-fittingmethod.

9. Defining the nature of the natural event to be eligible for thefinancial activity. For example, events officially determined to bewell-defined “hurricanes” by the National Hurricane Center can bedeclared by the rules of operation as the only eligible natural eventrecognized by the financial activity. In another instance, the financialactivity can treat “hurricanes” defined by the National Hurricane Centeraccording to their storm intensity as defined by the National HurricaneCenter. For example, only a hurricane defined as reaching category threeseverity by the National Hurricane Center can be declared eligible forthe financial activity. In one instance, payouts can be based uponhurricane strikes, weighted according to their storm intensity asdefined by the National Hurricane Center. For example, distributionsbased upon a hurricane's “best track” can pay out different amounts fordifferent qualifying participants, depending upon the severity of thehurricane at the time and/or point of contact with the hurricane, orother primary, secondary, tertiary or other criteria. In one instance,observed information from an independent external source regarding theland track of a tropical weather event may not be continuously reported.For example, the use of a “best track” or other table inherently assumesdiscrete points of data spread out over a time interval. Questions canarise when the reported data does not correspond to boundaries ofgeographical areas defined by the financial activity. Various treatmentscan be given. For example, an average value can be established betweentwo adjacent data points (e.g. two adjacent points of a “best track” orother table) and this average value can be used to determine the valueof the natural event as it passed through a given geographical area. Inanother treatment, if a data point (e.g. a point on the “best track” orother table) occurs within a geographical area of financial activity,the value attributed to the data point can be used for all investmentsmade within the geographical area predicted by a participant. Othertreatments are also possible.

10. Determining the amount of payout for those participants eligible toreceive payouts. Several instances of payouts varied according to anumber of different factors and considerations are given herein. Thesevariations can be accounted for in a number of different ways including,for example, a simple linear weighting or a more complex algorithm. Inanother instance, variations in payout between different participantscan be based upon one or more related or independent factors, as may bedesired. In one instance, determining the amount of payout forqualifying participants can be based upon primary, secondary and ifdesired, tertiary and other criteria. For example, for tropical weatherevents, primary criteria can be chosen to be the “locus” of landfall ofa tropical weather event. If desired, the land track of a tropicalweather event can be treated as another primary criterion (especiallywhere an equal weighting among primary criteria is assumed) or can betreated as a secondary criterion (especially where unequal, preferably alesser, weighting is assigned, relative to the primary criteria). Inanother instance, other secondary or lower level criteria can be chosen,such as residence time in a given geographical area, or wind speed orrange of wind speed associated with a tropical weather event, preferablywhile the tropical weather event is resident in the geographical areapredicted by the participant. As a further possibility, multiplecriteria can be established in tertiary or other additional levels(preferably assuming unequal weighting among the levels of thecriteria).

Other examples of variability factors have been discussed herein, andwill be summarized below.

Derivative Trading Financial Activity Model

As mentioned above, financial activities according to principles of thepresent invention may, in one instance, be modeled to resemble financialtrading of derivative securities interests (e.g. options), such as thosemonitored by the Commodity Futures Trading Commission (an independentagency of the United States government), the New York Stock Exchange,the Chicago Mercantile Exchange, the Iowa Electronic Market, and others.

Generally speaking, compared to other types of financial activitiesconsidered herein, activities under the “derivative trading type”financial model incorporate price controls driven more by marketconditions and less by direct control via the rules, principles ofoperation and other structures of the financial activity beingundertaken.

According to one example of this financial activity model, and assuminga hurricane or tropical weather type of natural event, initially allgeographical areas (e.g. counties) in play are available for individualinvestments at the beginning of the declared financial activity seasonat some predefined minimum investment amount (i.e. purchase price). Oncean investment is made for a particular geographical area, the nextinvestment to be made for that same geographical area is set at a higherpurchase price. For example, the rules of the financial activity canprovide that the second investment will undergo a flat rate pricingincrease, such as $0.25 per share. If desired, pricing increases can beassigned in steps according to step increases in the volume (eitherdollar amount or number of shares traded) of trading. If desired, othertypes of increases can be employed, including linear and nonlinearmathematical treatments of purchase price. The prices for subsequentinvestments in a particular geographical area may either continue toincrease or will plateau at a constant price until a set point minimumnumber of shares is reached.

Preferably, the set point is chosen to reflect a substantial “pot size”,which would justify a substantial step in price increase. If desired,several steps of price increases can be employed and related to similaror different sized blocks of shares. If, for example, a particulargeographical area suffers a lull in trading, the purchase price can bereduced, based on the time value since the last trading activity. Onceactivity resumes for a particular geographical area, price increases cango into effect. Each geographical area will have different initialprices and could have different step sizes or blocks, as shares aretraded, if desired. Thus, in this example, share price varies accordingto market activity (e.g. a stepwise or a smoothly varying increase astrading activity increases). Optionally, in this example share price canalso vary according to time factors, such as factors centered around afalloff (or optionally a rise) in trading activity.

It is generally preferred that pricing follows a number of principles.For example, it is generally preferred that trading begin with a setminimum price which could be different for each geographical area. Inone instance, it is generally preferred that the minimum price dependson market activity. In a second instance, it depends on theclimatological probability, (as currently estimated), of the particulargeographical area being hit, and, as trading progresses, how many shareshave been sold for a particular geographical area, and also the totalamount of money in the pot. If desired, each of these principles can beapplied in different amounts, (e.g. according to different increments,different rates or other mathematical treatment). It is generallypreferred that the minimum price increases as the probability for a hitin the geographical area increases, and the minimum price should also goup as the total dollars in the pot goes up. In one instance, it isgenerally preferred that the minimum price goes down as the number ofshares potentially splitting the pot (i.e. for a particular geographicarea) goes up.

As an alternative, the “derivative trading” type of financial activitycan be operated according to a different structure. In this secondexample, the financial activity in a maturing market can be alternated(less preferably, replaced) with an “auction” form of financialactivity. In one instance, the auction form of financial activity, onceinitiated, is scheduled to occur at different intervals. For example,multiple auctions would preferably occur periodically throughout theseason, in one instance, with the time spacing between auctions beingsparser (e.g. weekly or monthly) early in the process, and more frequent(e.g. multiple auctions per day) when tropical cyclones are in existenceand especially when hurricanes are threatening imminently.

In one instance, the reserve price for an auction is preferably madeproportional to the probability that a particular geographic area willbe hit, multiplied by the funds available, and that product divided bythe number of shares outstanding for that particular geographical area.If desired, the proportionality constant applied could be unity or somenumber smaller or greater than one.

In another variation, researchers set out trading contractscorresponding to different geographical sections, with contract pricesbeing set by participants, rising and falling based on their degree ofconfidence of where landfall will occur. The value of these contractswill rise and fall based on market acceptance of a forecasted stormoccurrence.

Examples of the Derivative Trading Type Model

EXAMPLE 1

Assuming a first auction has concluded at a time in January, before theconventional “hurricane season”, the “stage 1” probability, calculatedas set forth herein, is 0.02. Assuming the previous financial activitysold 5000 shares for the geographical area of interest, and thatcollectively, all the auctions took in $25 million overall. The minimumunit price would then be (0.02)×($25 million)/5000=$100, and therefore,nobody could bid less than a $100 minimum price. If there were moretakers than shares, some or all of the bidders at $100 would be out ofluck.

EXAMPLE 2

Assuming a time in July, when there is a tropical storm in existence, ina location that is favorable for hitting the geographical area (e.g.county of interest. The “stage 2” probability for that area iscalculated as set forth herein to be 0.10. There are now 100,000 sharesthat have been bought for the geographical area of interest, and thetotal pot is $2 billion. Minimum bid price would be (0.10)×($2billion)/100,000=$2000.

EXAMPLE 3

That tropical storm contemplated in example 2 has dissipated and nowposes no threat to the geographical area of interest. Also, there arecurrently no other storms that are threatening, and the probabilitydrops back to 0.02. There's now $2.1 billion in the pot, and 105,000shares have been bought for the geographical area of interest. Theminimum bid price has gone down because the probability has gone down:(0.02)×($2.1 billion)/105,000=$400.

In each of the examples above, there would preferably be separateauctions for each geographical area in play (with one or more auctionsfor each geographical area), with the degree of investor interestdetermining whether and/or how much the price would rise above thelevels indicated. Also, it is generally preferred that the number ofunits on offer at any one time would be limited to a fixed number, itbeing expected that, if the total offer is unlimited, there would be noincentive to bid higher than the reserve price.

If desired, special treatment could be given later in a financialactivity season when it becomes clear that certain geographical areasare unlikely to ever be perceived as generating substantial investorinterest (e.g. inland geographical areas that historically have not, oronly very rarely, been hit.

“Hurricane Funds” Example

I. Summary

The following is one example of financial activity according toprinciples of the present invention. As mentioned, the present inventioncontemplates different types of financial activity models. The followingexample is given in terms of a financial activity model of the typecomprising a game of skill, although many of the principles set forthherein are applicable to other financial activity models, as well. Thefinancial activity contemplated herein is generally referred to as“Hurricane Funds”, emphasizing the investment nature of the financialactivity as a hedge against unforeseen loss. In the example given, theHurricane Funds are games of skill that focus on a particular type ofnatural event, namely hurricanes making landfall in the United States.That is, in this example, only tropical cyclones having a strengthmeeting the minimum criteria to be termed “hurricanes” are considered.

It is recognized that a tropical cyclone originates at sea, and grows inintensity over time, before making landfall. It is possible that theintensity of the tropical cyclone may rise and fall. The criteria chosenhere is that the tropical cyclone have a minimum category one hurricaneintensity at the time of landfall. The Hurricane Funds are structured toallow “participants” or “investors” to use them in a way that canaugment hurricane insurance, while simultaneously providing income toparticipating states to help defray costs associated with disastermanagement. Homeowners and business insurance policies typically containdeductible provisions ranging from 2% to 15% of a home's value. Inaddition, these same policies do not provide any coverage for theoutside areas of a home or business, such as landscaping, outsidelighting, docks, fencing and the like. Often, property owners do nothave sufficient flood insurance and have other omissions or insufficientcoverage which result in catastrophic financial losses in even thelowest rated hurricanes. Also, losses are suffered when rates are lostand also, where temporary housing is needed.

Because financial activities according to principles of the presentinvention can be carried out according to different financial models.The Hurricane Funds, as an example of financial activities according toprinciples of the present invention, can be distinguished from insuranceinstruments, with payouts for qualifying investments not being tied toactual property losses, and thus being dispensed more quickly. Payoutshere do not involve inspection by adjusters, and therefore can be mademuch more promptly—(e.g. within a few weeks). This promptness andflexibility can be achieved because the Hurricane Funds operate in a waythat emphasis is placed on payouts that primarily depend uponapportioning Hurricane Funds that have been invested into a particularHurricane Fund, and on the amounts and timing of Hurricane Fund entriesfor counties that experience a hurricane strike.

As mentioned above, financial activities may be constructed aroundmodels that cover the natural event activity either on an event by eventbasis, or on a “seasonal” basis for events occurring during a predefinedspan of time. In the example given above, choice was made to operate onthe “seasonal” basis. Accordingly, the number of Hurricane Funds inwhich investors may participate can vary from year to year. Initially,two or three Hurricane Funds are opened to investment, beginning on 1January. Each of these initial Hurricane Funds relate to one of thefirst two or three tropical cyclones passing over a portion of the U.S.with at least hurricane-force winds during the upcoming calendar year,as determined, in one instance, from the tropical cyclone Advisoriesissued by the National Hurricane Center (NHC). The overwhelming majorityof these events occur during the span of time, popularly referred to asthe “hurricane season” (1 June through 30 November). In active hurricaneseasons, additional Hurricane Funds may be opened as the hurricaneseason progresses.

Each investment in a Hurricane Fund is preferably made in the form ofshares purchased for one or more of the approximate 1155 counties (orcounty equivalents, for example Louisiana parishes) that are plausiblehurricane targets. When these shares have been purchased for countiesthat later receive a hurricane strike, they qualify their owners toreceive payouts from that Hurricane Fund. All of the investments in agiven Hurricane Fund, less items which may be defined in a giveninstance (e.g. portions designated for participating state governmentsand fees for Hurricane Fund management), are paid to investors in thequalifying county or counties. The formula determining these payoutsaccounts both for the chances of a hurricane striking the qualifyingcounty(s), as assessed at the time a Hurricane Fund investment is made,and a reward for earlier investments into that Hurricane Fund.

II. Structure of Hurricane Fund Investments

A. Hurricane Fund Shares

Entries in the Hurricane Funds are made for individual counties, in theform of “shares” in one of the specific Hurricane Funds available forinvestment. The first Hurricane Fund relates to the first tropicalcyclone to make landfall as a hurricane over the U.S., including PuertoRico and the U.S. Virgin Islands; the second Hurricane Fund relates tothe second hurricane striking the same area; and so on. For example,suppose the first U.S. hurricane landfall in a hypothetical year is atGalveston County, Texas, and the second is at Miami-Dade County, Fla.Shares purchased in Hurricane Fund #1 for Galveston would qualify theirowners for a portion in all of the money invested in that HurricaneFund, but investors in Hurricane Fund #1 for Miami-Dade would receivenothing from that Hurricane Fund. On the other hand, investors inHurricane Fund #2 for Miami-Dade would be entitled to a portion of allof the money invested in that Hurricane Fund, whereas Galvestoninvestors in Hurricane Fund #2 would receive nothing from that HurricaneFund.

The primary means of making Hurricane Funds investments will, in oneexample, be by credit card, through a Hurricane Funds website. Oneexample of a web site is given in FIGS. 13-18, which shows a “StormFund”web site implementing a Hurricane Fund financial activity. FIG. 13 showsa web site screen which serves either as a welcome page or one of thefirst pages that a participant will encounter upon acquiring the website. Included in the screen depicted in FIG. 13 is an indication 600 ofthe current open Hurricane Funds and a brief summary 602 of currenttropical cyclone activity.

In one instance, in addition to providing web site access, the presentinvention also provides that individuals who do not have internet accesswill be able to participate in the Hurricane Funds by using touch screendisplays located at convenience stores, gas stations and the like.Individuals will make selections by touching an interactive screen, forexample, and pay for their investment by swiping a credit card orproviding a cash payment to the retail establishment. Preferably, thedisplay will automatically generate a printed receipt (includingidentification number) for both credit card and cash purchases. A socialsecurity number and perhaps a biometric device such as a fingerprintscan may be required to participate in the Hurricane Fund.

FIGS. 16-18 show share purchases for the StormFund web siteimplementation of a Hurricane Fund. In FIGS. 16 a and 16 b-16 c twoscreens are shown for purchasing shares and in FIG. 17 a confirmation isgiven for shares purchased. In FIG. 18, a summary or “portfolio” of alltransactions for a participant is shown.

Once an investment in a Hurricane Fund is made, the investmentpreferably cannot be reversed as these would affect the value of theshares purchased by others. In one instance, an investment is notconsidered to have been accepted until the investor's credit cardcompany credits that investment in the Hurricane Fund. If the creditcard company later reverses that payment to the Hurricane Fund, thevalue of the shares purchased in the Hurricane Fund will be preferablyset to zero.

B. Share Prices

The price of a Hurricane Fund share for a particular county is, in oneinstance, determined by a mathematical formula involving both theprobability of that county being hit, and price discounts for earlyinvestments. Therefore, share prices in Hurricane Funds will bedifferent at different times, and different for different counties at aparticular time. The price incentives for early investment may besubstantial, and are designed to encourage investments before anytropical events are in existence, and indeed well before the beginningof hurricane season. It is anticipated that much of the early investmentactivity will come from investors who may want to use the HurricaneFunds to supplement conventional insurance, or from insurers using theHurricane Funds as a reinsurance vehicle. One purpose of financiallypenalizing later investments is to obtain the greatest amount of moneyin the Hurricane Fund as possible, by encouraging early investing anddiscouraging procrastination.

Share prices are preferably higher when hurricane strike probabilitiesare higher and lower when hurricane strike probabilities are lower.Specific details of the pricing formula will preferably be madeavailable on the Hurricane Funds website, for those who may beinterested. Factors influencing the pricing probabilities include thefollowing:

-   -   1. The location of the county for which the investment is being        made. For example, counties in south Florida are historically        more likely to be hit than are counties in Massachusetts, on        average, and so share prices for Florida counties will usually        be higher.    -   2. The size of the county. Larger counties present bigger        targets, and so shares in larger counties will generally be more        costly.    -   3. Which of the Hurricane Funds an investment is made in. For        example, shares in Hurricane Fund #2 cost less than shares in        Hurricane Fund #1, other factors being equal, because it is more        likely for one U.S hurricane to occur in a given year than for        two such events to occur.    -   4. The location(s) and strength(s) of tropical cyclones in the        Atlantic Ocean, Caribbean Sea, and/or Gulf of Mexico, that        potentially threaten the United States. Such storms in some        locations are more likely to affect particular counties as        hurricanes, based on a historical climatological analysis of        more than a century of hurricane data, and share prices for such        counties will increase accordingly. Once a tropical depression        is announced by the National Hurricane Center, and continuing        through the intensification of the storm, share prices continue        to increase each time a storm is upgraded in strength, because        threats to land are larger for stronger storms. This aspect of        the share pricing is intended to prevent persons who now have        knowledge of a currently existing storm from being unfairly        rewarded by having this information, relative to early Hurricane        Fund investors.        C. Opening and Closing Hurricane Funds

The number of Hurricane Funds that may be opened to investment is at thediscretion of the Hurricane Funds management or provider. It isanticipated that two or three Hurricane Funds will be opened on January1st of each year. These Hurricane Funds pertain to possible U.S.hurricane landfalls during that calendar year, whether or not they occurduring the generally recognized “hurricane season” (June 1st throughNovember 30th). At the discretion of the Hurricane Funds Administrators,additional Hurricane Funds may be opened before the beginning of the“hurricane season,” for example if an unusually large number ofhurricanes may be forecast to occur in that year. Similarly, additionalHurricane Funds may be opened to investment during the hurricane season,particularly if previously open Hurricane Funds have all been closed byhurricane landfalls (preferably, measured by the eye of the hurricanehitting land), or by imminent possible hurricane landfalls.

Hurricane Funds will preferably be closed to further investment when thestorm to which they pertain is sufficiently close to landfall, accordingto the current NHC Advisories for that storm. Preferably, persons shouldleave home and not participate in the Hurricane Funds activity, whentold to evacuate. The exact trigger for Hurricane Fund closingspreferably strikes a balance between public safety (not discouragingprudent evacuation by remaining open too long) and broad participation(not cutting off investments before a given storm is an imminentthreat). A possible compromise could be to trigger a Hurricane Fundclosure when its tropical cyclone is both at hurricane strength and hasgenerated NHC hurricane warnings for one or more of the counties forwhich Hurricane Fund investments may be made. In addition, forfast-moving and/or rapidly developing hurricanes, Hurricane Funds wouldbe closed when the operational estimate of its track, as published inthe relevant NHC Advisory, has traversed at least one of the countiesfor which Hurricane Fund investments may be made.

Because Puerto Rico and the U.S. Virgin Islands are relatively far fromthe U.S. mainland, a Hurricane Fund may be closed for these twoterritories without it necessarily being closed for the rest of the U.S.In such cases, shares for counties in the conterminous U.S. that aresubsequently traversed by the same storm at hurricane strength will alsoqualify to receive payouts from that Hurricane Fund. However, aHurricane Fund that is closed because of storm proximity to or landfallon the U.S. mainland will preferably also close for Puerto Rico and theU.S. Virgin Islands.

III. Hurricane Fund Payouts

A. Disbursements to Qualifying Shares

Preferably, all of the money invested in a given Hurricane Fund, lessfixed percentages for participating state governments (to help supportemergency management efforts) and for Hurricane Fund management, isdivided equally among Qualifying Shares. A Qualifying Share is a sharepurchased for a county that is subsequently hit by the hurricane towhich that Hurricane Fund pertains. Therefore early investors, whoseQualifying Shares were purchased relatively cheaply, will realize largerreturns on their investments than will later investors, for whom theshare prices were higher. To the extent possible, disbursements fromHurricane Funds to holders of Qualifying Shares will preferably be madeby posting the amounts to the credit card account from which theinvestment was originally made. This mechanism has the advantage thatthe disbursements will be available very quickly, to people who may needthese financial resources for rebuilding or other hurricane-relatedexpenses. For example, individuals who may be displaced by extendedevacuation from their homes may have especially acute needs for thesepayouts. These problems are magnified by loss of jobs. It may benecessary to withhold portions of large disbursements on behalf of theIRS.

B. Determination of Qualifying Shares

For the purposes of determining Qualifying Shares in Hurricane Funds,counties are considered to have been “hit” in one instance if the trackof the center of the hurricane as determined from the NHC Forecast,Public, or Special Advisories for that storm (or, e.g. within, ±20nautical miles) passes through some portion of that county. The basicinformation in the NHC Advisories that is used to determine QualifyingShares in this exemplary instance are the storm positions (latitude andlongitude) and strengths (maximum sustained winds), that are reported tohave occurred at particular times. These location points will preferablybe connected by straight-line segments (or, optionally curves calculatedfrom a formula in operational use at NHC or otherwise made public andpreferably mentioned by reference on the Hurricane Fund website). Sharesin counties traversed by a track so calculated, between two consecutivepositions at which the storm was at hurricane strength (maximumsustained wind of 64 kt, or 74 mph), will, in this instance, beQualifying Shares. For this purpose, the geographical extent of countieswill be defined for example by the Cartographic Boundary Files of theU.S. Census Bureau that are published athttp://www.census.gov/geo/www/cob/co2000.html. These definitions couldalso be modified to allow shares in counties affected by strongerhurricanes (Category 2+hurricanes, as indicated by maximum sustainedwinds reported in the NHC Advisories) to return a larger share ofHurricane Fund assets to their investors.

Preferably, it should be pointed out to Investors in Hurricane Fundsthat these rules for determining Qualifying Shares have been somewhatidealized, relative to real-world hurricane behavior, in the interest ofhaving a promptly available, clear, explicit and automatic way ofdisbursing Hurricane Fund assets to Qualifying Shares. In particular, afew points should be noted. The first point is that: there will often becounties experiencing hurricane-force winds and/or other hurricaneimpacts that nevertheless do not qualify as having been “hit” accordingto the definition used by the Hurricane Funds. This will be the caseespecially for the larger and more powerful storms. Hurricane Fundinvestors whose intention is to, in effect, supplement their insurancecoverage are therefore encouraged to invest in surrounding countiesalso. To encourage investors to protect themselves, the Hurricane Fundssite will automatically flash or change color for several counties whichborder the county initially selected and urge our investors to spreadtheir investment to include surrounding (collar) counties. In thismanner, the investor will, in this instance, have greater opportunity tocollect from the Hurricane Funds actively if damage occurs, but the eyeof the hurricane does not enter their county.

The second point is that, because qualifying counties are determined onthe basis of storm positions only at particular, and possibly irregulartimes, small discrepancies between the calculated track (used todetermine Qualifying Shares) and the actual track (as determined somemonths later in the official NHC Tropical Cyclone Report for that storm,or that might be evident at the time of the storm from a series ofweather-radar images, for example) can and will occur. Again, it may beadvisable for some individuals to invest in nearby counties, in additionto the county(s) in which they have the most interest.

As a third point, the U.S. Census Bureau data files are onlyapproximations to the true geographical outlines of many counties. Theyconsist of a collection of line segments, and so will not accuratelyfollow curving county boundaries. In addition, portions of some counties(particularly relatively small islands) are not included in the CensusBureau's Cartographic Boundary Files. For example, the Dry Tortugas arenot included in the Cartographic Boundary File for Florida, so that ahurricane passing over this portion of Monroe County, Fla., would not byitself constitute a “hit” on Monroe County for the purpose ofdetermining Qualifying Shares.

In cases where there may be multiple tropical cyclones in existence atthe same time, an explicit rule deciding which storm pertains to whichHurricane Fund is needed, if more than one of them eventually affectsthe U.S. as a hurricane. Priority can be determined according to thetime of landfall on at least one of the counties for which HurricaneFunds investments may be made. For example, if the hypotheticalhurricane “Bob” makes U.S. landfall ahead of hypothetical hurricane“Alice,” “Bob” would be assigned to Hurricane Fund #1, and “Alice” wouldbe assigned to Hurricane Fund #2. It is anticipated that payouts toQualifying Shares will be made within two weeks of the final NHCAdvisory for the storm in question. In unusual cases, such as for stormsthat may have the potential to reintensify and affect the U.S. again,Hurricane Fund payouts may be delayed beyond two weeks at the solediscretion of the Hurricane Funds Administrators. In all cases,Hurricane Funds disbursements will preferably be made on the basis ofthe best and most recent information available from the NationalHurricane Center at that time about the storm in question, and will notbe subject to revision in the event of subsequent updates to thatinformation.

IV. The Hurricane Funds Website

With reference to FIGS. 13-18, the Hurricane Fund's activity, in oneinstance, will be administered through a website that calculates shareprices automatically, according to information from NHC Advisories thatare updated at least 4 times daily when one or more Atlantic tropicalcyclones are present, and receives payments from investors' credit cardaccounts. Preferably, first-time entrants will need to register.Password protection will preferably be employed for credit-card accountsassociated with each registration, to facilitate any eventual payoutsthat may need to be made to that account. Social Security informationwill preferably be required as part of the registration, in order forstate and national government agencies to track tax liability on anypayouts.

Current share prices for all available counties can be displayed bothgraphically and in tabular form. With reference to the schematic screendepictions of FIGS. 14 and 15, clickable maps (coastal area andindividual state) are made available, with share prices indicatedapproximately with a color code. Preferably, state-by-state pulldownmenus (not shown) are also provided. Participants are to be given theoption of specifying their entries either in terms of shares bought, ordollars to be entered, for each county selected. Choices made by aparticipant are shown in shaded form in FIGS. 14 and 15.

The sums entered to date in each Hurricane Fund (and available forsubsequent payout) will be posted on the Hurricane Funds website andcontinuously updated. For Hurricane Funds that are currently open forinvestment, it will be possible for site visitors to determine potentialpayouts for a share in any county, under various assumptions about thetrack of the hurricane to which that Hurricane Fund pertains. These“what if” calculations can be made available for any historicalhurricanes that have crossed a county in question or for anyhypothetical hurricane track that a website visitor might be interestedin.

For Hurricane Funds that have been closed to further investment, theactual hurricane track and Hurricane Fund payouts per share willpreferably be listed, together with a variety of official NHCinformation about that storm. Until a given tropical cyclone has fullydissipated, and so has no chance of reintensifying and subsequentlyaffecting a portion of the U.S., these estimates will be subject torevision. Because share prices will be updated (preferably at least fourtimes daily according to the most current Advisory information fromNHC), it will be necessary for the site to be unavailable for acceptinginvestments for short, pre-scheduled, periods of time (e.g. every 6hours). When an Atlantic tropical cyclone is relatively close to theU.S., these blackout times will be more frequent, in order toaccommodate the additional NHC Advisories and to perform other necessaryduties. In addition, some or all of the parts of the website may closefrom time to time on an unscheduled basis, in order to incorporate newinformation that is occasionally provided by NHC at times other than theusual Advisory schedules. These additional blackout periods will alsoallow time for the new information to be disseminated to interestedparties. In one instance, the lengths of website blackout times willdepend on the speed with which the NHC advisories can be obtained, andtheir information transformed to updated hurricane probabilities for theHurricane Funds. Even when there are no Atlantic tropical cyclones inexistence, share prices will preferably be updated during the regular(e.g. 6-hourly) blackout periods, with decreasing of the early-entrydiscount by a small amount.

When choosing to purchase shares for a particular county or neighboringcounties, it is preferable to encourage investors to thoroughlyfamiliarize themselves with as much data on hurricanes as is publiclyavailable. To assist in this effort, helpful weather-related links maybe provided on the Hurricane Funds website, as well as other educationalinformation that might be helpful. For example, a graphical history ofstorms which have occurred during the last 113 years and theirassociated tracks may be provided to investors and other participants.

V. Disposition of Hurricane Fund Assets When No U.S. LandfallingHurricane Occurs

It can happen that a Hurricane Fund will be closed by the imminentapproach of a hurricane which subsequently fails to pass over any U.S.land area, according to the definition of a “hit” used by the HurricaneFunds (e.g. Hurricane Ophelia (2005) would have been one such case). TheHurricane Funds need to have a clear and automatic rule for thedisposition of the assets of such Hurricane Funds. Some possibilitiesare:

-   -   1. Transfer all assets and share ownerships to the next        Hurricane Fund. For example, if Hurricane Ophelia had closed        Hurricane Fund #3 in 2005, all investments made in Hurricane        Fund #3 would be transferred to Hurricane Fund #4. Shares in        Hurricane Fund #4 would then include those reflecting previous        investments in Hurricane Fund #4, in addition to those purchased        by investments in (the now closed) Hurricane Fund #3. Assets of        the combined Hurricane Fund #4 would then have been paid to        shares for counties qualifying according to the path of        Hurricane Rita, regardless of whether they represented        investments in Hurricane Fund #3 or Hurricane Fund #4.    -   2. Transfer the assets, but not the share ownership, to the next        Hurricane Fund. Here, the money invested in Hurricane Fund #3        for the hurricane that eventually turned out to be Ophelia would        have been transferred to Hurricane Fund #4 and paid according to        the track of hurricane Rita, but shares purchased in the        original Hurricane Fund #3 in this example, would not qualify        for any disbursements.    -   3. Another rule will be needed to govern assets of Hurricane        Funds remaining open at the end of the year. If desired, one of        the above options, (although not necessarily the same as that        governing mid-season Hurricane Fund closures) or perhaps, some        other option could be chosen for fund disposition.    -   4. The funds can be returned to participants, less management        costs, if desired.        Detailed Consideration of the “Hurricane Funds” Example        I. Introduction

The following is a detailed consideration of the Hurricane Funds examplegiven above. In one example, the number of hurricane funds in whichplayers may participate varies from year to year. Initially, K hurricanefunds are opened, beginning on 1 January of the year before thehurricane season in question. Each of these relate to one of the first Ktropical cyclones passing over a portion of the U.S. with at leasthurricane-force winds, as determined by the National Hurricane Center orits successors, during the hurricane season (1 June through 30November). In relatively active years, additional hurricane funds may beopened as the hurricane season progresses. The Hurricane Funds enteredin a given natural event, less portions for state participation andhurricane fund management, are paid to entrants according to a formulathat accounts both for the chances of each hurricane striking thequalifying county(s), as assessed at the time a participant entry ismade.

II. Structure of the Hurricane Funds

A. One Example of Hurricane Fund Shares

Entries (investments) in the Hurricane Funds may be made for individualcounties, in the form of “shares.” The price of a share varies in oneinstance, according to the probability of a hurricane strike on thecounty for which the entry is made, using information available at thetime the entry is made, and modified by a discount factor thatencourages early entries and penalizes later entries. Shares are pricedrelative to a benchmark, or “par” value, defined by an entry for themost vulnerable county historically, (Palm Beach, Fla.) made at thebeginning of the hurricane season (1 June). Choice of Palm Beach Countyas the par level is arbitrary because all of the share values arerelative; but this choice may have investor appeal, in that the pricesof entries for all other counties will then reflect an apparentdiscount.

The reference probability for a hurricane strike on Palm Beach county,as well as reference probabilities for the other n counties for whichentries are accepted, has been derived from a climatological analysis ofU.S. landfalling hurricanes that occurred from the late 19^(th) centurythrough the present. This type of analysis can specify the probabilitythat the center of a hurricane-force tropical cyclone will pass within75 nautical miles (86.25 statute miles) of the county center in a givenyear. These values can be adjusted for the size of a county byestimating the probability that a hurricane will track through thecounty in a given year, assuming that the county has a circular shape.Defining the probability of passage within 75 n. mi. of county i asQ_(i), the size-adjusted annual climatological hurricane strikeprobability is, according to the following Equation (1): $\begin{matrix}{{Q_{i}^{*} = {{Q_{i}\frac{2\left( {A_{i}/\pi} \right)^{1/2}}{2 \cdot 87.25}} = {0.006541\quad A_{i}^{1/2}Q_{i}}}},} & (1)\end{matrix}$where A_(i) is the area of the county, in square statute miles. The87.25 mile counting radius is used to smooth the somewhat erratichistorical record of hurricane tracks.

Referring now to FIG. 19 a schematic diagram indicates a preferredtreatment of a geographical unit, herein, Palm Beach county, Fla., withan area of approximately A=2230 sq. mi., represented by a circle of thesame area (dashed). Hurricane centers passing within 86.25 miles of thecounty center (long arrows) have a probability of about 0.31 (ratio ofthe dashed circle diameter to 172.5 mi) of passing through the countyitself.

FIG. 19 illustrates the geometry behind Equation (1), for the case ofPalm Beach County. The area of this county is approximately A=2230 sq.mi., and the annual probability of a hurricane track within 86.25 mi. ofthe county center is Q=28.74%. Many storms tracking within this distanceof the county center will fail to pass through the county, but theproportion that will do so is given approximately by the ratio of thediameter of the circle approximating the county (=2[A/□]^(1/2)=53.3 mi.)to twice the search radius defining Q, or 172.5 mi. Therefore, for thiscounty, Q*=28.75% (53.3/172.5)=8.88%. The counties included in theHurricane Lottery, their approximate areas, and their Q and Q*climatological values are calculated and made available for futurereference.

The reference probability for a hurricane strike on Palm Beach county inany single hurricane fund is smaller than Q*/100=0.0888, because thereare more than one U.S. hurricane landfalls in an average year. Thisaverage number of U.S. hurricane landfalls is □=1.7 hurricanes/year, sothe Palm Beach County reference probability is, according to thefollowing Equation (2): $\begin{matrix}{P_{ref} = {\frac{Q^{*}}{100\quad\mu} = {\frac{8.88\%}{(100)(1.7)} = {0.0522.}}}} & (2)\end{matrix}$

In addition to depending on hurricane likelihoods for a county ofinterest in relation to the reference probability for Palm Beach countyin Equation (2), share prices also increase gradually through the timeperiod that entries are accepted, according to daily compounding of anannualized discount rate D that is multiplied in the share pricingformula, according to the following Equation (3): $\begin{matrix}{{{Time}\text{-}{of}\text{-}{entry}\quad{adjustment}} = {\left( {1 + D} \right)^{\frac{{j\quad{date}} - 152}{365}}.}} & (3)\end{matrix}$Here jdate is the Julian date (consecutive numbering of the days of theyear), so that the exponent in Equation (3) is zero, and Equation (3)produces no change in the share price, for 1 June (jdate=152). Juliandays in the year prior to the hurricane season in question are negative.If the annual discount rate is 5%, then D=0.05.

Adjusting share prices by multiplying by Equation (3) rewards earlyentries and penalizes late entries, in part as a compensation foropportunity costs. An appropriate value for the discount rate D needs tobe determined, and might be varied from year to year to reflect valuesin then-current financial markets. However, D should also include a verysubstantial premium over short- or medium-term interest rates in orderfor this factor to have a significant effect on share prices, and so toencourage contributions to the Hurricane Funds well in advance of thebeginning of hurricane season. Referring now to FIG. 20, a graphicalplot shows share price, relative to par on 1 June, for five values ofthe annual discount rate, D. FIG. 20 indicates values of Equation (3) asa function of date of entry into the Hurricane Fund, for a range ofvalues of D. The relative share price is 1.0 for all discount rates atthe par date of 1 June. For current market rates on short-term money(D≈0.04, or 4%) the effect on share price, shown by the dashed line, isnegligible. An annual discount rate of D=4.0 (i.e., 400%) is necessaryto produce (for example) a price differential of approximately 15%between 1 May and 1 June.

The price per share for a particular county, i, is determined by theprobability of a hurricane strike on that county, p_(i), at the time theentry is made; and in relation to the par value for an entry on PalmBeach county (Equation 2) as of 1 June (Equation 3). These factors arecombined to determine the share price using the following Equation (4):$\begin{matrix}{{{Price}{\quad\quad}{per}\quad{share}} = {{F\left( {1 + D} \right)}^{\frac{{j\quad{date}} - 152}{365}}{\frac{\ln\left( {1 - p_{i}} \right)}{\ln\left( {1 - p_{ref}} \right)}.}}} & (4)\end{matrix}$This equation is the basic pricing tool for the hurricane funds. Here Fis an arbitrary pricing factor that could be chosen according tomarketing considerations. It is the par price for one share, for PalmBeach County on 1 June. For example, F=1 corresponds to $1/share. Ahigher pricing factor, such as F=100 ($100/share) might have the effectof subtly encouraging some participants to enter more money in theHurricane Fund. The second factor in Equation (4) specifies that entriesmade before 1 June will be cheaper, and entries made after 1 June willbe more expensive, as indicated in Equation (3) and in FIG. 20. FIG. 21,table 1, shows an example of illustrative share prices, in roundnumbers, for a range of strike probabilities p_(i), assuming purchase on1 June, with F=$100/share.

Finally, Equation (4) indicates that the share price for county idepends on the probability pi relative to the reference climatologicalprobability p_(ref) for Palm Beach county, through the function −In(1−p). This functional form has been chosen in order to obtain shareprices that are economically logical, particularly toward the extremesof the probability range. For p_(i)=0, Equation (4) produces a zeroshare price: shares in a county are free if there is absolutely nochance for the Hurricane Fund to pay off for that county, and shares areextremely cheap for counties where the probabilities of being affectedby hurricanes (e.g., in west Texas) are vanishingly small. At the otherextreme, the share price approaches infinity as the probability that ahurricane will affect the county approaches 1, so that the hurricanefunds offer no reward for betting on a sure thing. FIG. 21, table 1shows the dependence of share prices (purchased on 1 June, withF=$100/share) on the strike probability p_(i), for a few illustrativecases. According to equation (4), unless there are Atlantic tropicalcyclones currently in existence, counties for which the climatologicalprobability Q_(i)*/(100 □)=p_(i)<p_(ref) (i.e., all counties except PalmBeach), the price per share will be less than F, and accordingly mostparticipants will receive a discount in the purchase price.

III. Determination of strike probabilities for Equation (4)

The hurricane strike probabilities p_(i) in Equation (4) are based onthe best information available at any given time, that can reasonably beobtained in an automated way by the Hurricane Fund's website software.If no Atlantic tropical cyclones are in existence at the time of aHurricane Fund entry, that best information will be the unconditionalclimatological probability of a hurricane strike on the county inquestion for the k^(th) hurricane fund. These will be referred to in thefollowing as “Stage I” probabilities.

Sharper probability information about hurricane strikes can be obtainedwhen one or more Atlantic tropical cyclones are in existence, but aretoo far from the U.S. for probability forecasts of hurricane-force windsfor counties of interest to be issued by the TPC. In such cases, theprobabilities p_(i) in Equation (4) are obtained from climatologicalvalues for each county, conditional on the existence of a tropicaldepression, or tropical cyclone such as a hurricane, in a given sectorof ocean. These conditional climatological probabilities will bereferred to as “Stage II” probabilities.

Finally, the TPC issues probability forecasts for hurricane-force windsduring the upcoming 5 days. These forecasts provide the “Stage III”probabilities, when they extend over land areas of interest. To theextent that there may be more than one Atlantic tropical cyclone inexistence at a given time, Stage II and/or Stage III probabilities foreach need to be combined in order to evaluate p_(i) in Equation (4).

A. Stage I Probabilities

The Stage I probabilities are obtained from climatological values, in away that follows Equation (2) for the reference strike probability forPalm Beach county. In Equation (2), the size-corrected annual strikeprobability Q* is divided by the average number of strikes per year, □,to reflect the fact that more than one hurricane affects the U.S. peryear, on average, and is converted from percentage to fractionalprobability. The Stage I probabilities are further corrected to reflectthe fact that, for the second and subsequent hurricane funds, it is lesslikely for there to be a corresponding U.S. hurricane landfall. That is,entering the first hurricane fund is less uncertain than is entering thesecond hurricane fund with respect to the Stage I probabilities, and sothe share prices for the first hurricane fund should be higher.Similarly, the share prices should be higher for the second hurricanefund than for the third and any subsequent hurricane funds. Theseadjustments are included in the calculation of the Stage I probabilitiesusing probabilities for different numbers of landfalling hurricanes, ascalculated using the Poisson distribution. This distribution is aconventional and well-accepted probability model for allocatingprobability among the possible numbers of hurricanes in a given yearwhen the average number per year is □. Specifically, the Poissonprobabilities for each possible number, X, of U.S. landfallinghurricanes are, according to Equation (5): $\begin{matrix}{{{\Pr\left\{ {X = x} \right\}} = \frac{\mu^{x}{\mathbb{e}}^{- \mu}}{x!}},{x = 0},1,2\quad,\quad\ldots} & (5)\end{matrix}$Using these Poisson probabilities with □=1.7 U.S. landfalling hurricanesper year, on average, the Stage I probabilities for the i^(th) county ink^(th) hurricane fund are, according to the following Equation (6):$\begin{matrix}{{p_{i}^{(I)} = {\frac{Q_{i}^{*}}{100\quad\mu}\frac{\Pr\left\{ {X \leq k} \right\}}{1 - {\Pr\left\{ {X = 0} \right\}}}}},{i = 1},\ldots\quad,{n.}} & (6)\end{matrix}$When a Stage I probability is the appropriate risk estimate for countyi, p_(i) ^((I)) is substituted for p_(i) in Equation (4) to determinethe share price. For the k=1^(st) hurricane fund, the ratio of Poissonprobabilities in Equation (6) is 1, so that Equation (6) for County i isexactly analogous to Equation (2) for the reference county, Palm Beach.That is, p_(ref) in Equation (2) is nothing more than the Stage Iprobability for Palm Beach county in the first hurricane fund. For thesecond and subsequent hurricane funds, these Stage I probabilities arereduced to reflect the fact that the corresponding hurricanes are lesslikely to occur. The purpose of this second factor in Equation (6) is toprovide a further price advantage to early entrants in the second andsubsequent hurricane funds, which may not pay off at all, relative toentrants who wait until after the formation of what may become thek^(th) landfalling hurricane before entering. FIG. 22, table 2 showsPoisson probabilities from Equation (5), calculated with μ=1.7landfalls/year, the corresponding cumulative probabilities Pr{X≦x}, andthe ratio of probabilities on the right-hand side of Equation (6). FIG.22, table 2 shows Poisson probabilities for μ=1.7 hurricane landfallsper year, with corresponding cumulative probabilities and ratios ofprobabilities used in Equation (6).B. Stage II Probabilities

When an Atlantic tropical cyclone is in existence, the Stage IIprobabilities p_(i) ^((II)) associated with county i being affected by ahurricane may increase from the respective Stage I value, depending onthe location and intensity of the storm. These Stage II probabilitiesare obtained by combining the Stage I probabilities, with conditionalclimatological relative frequencies of hurricane-force winds occurringwithin 120 n.mi. (138 statute miles) of each county center, given that atropical cyclone that is or will eventually become a named storm (i.e.,at least tropical storm strength) exists in one of 406 2.5 by 2.5 degreeregions of the Atlantic ocean, Caribbean Sea, or Gulf of Mexico. Theseconditional relative frequencies denote one of these ocean regions inwhich there is a tropical cyclone as j, and the conditional probabilitythat hurricane force winds due to this storm will eventually occurwithin 120 n. mi. of the center of county i as Q_(ij). That is, for eachocean region j, there is a data table similar to that for theunconditional climatological values Q_(i), although the conditionalQ_(ij) climatological values are calculated with a larger smoothingradius (120 vs. 75 n. mi.) because there are fewer storms from which tocalculate the conditional relative frequencies. Accounting for thislarger smoothing radius, the size-adjusted conditional relativefrequencies Q*_(ij) are calculated, analogously to Equation (1), usingthe following Equation (7): $\begin{matrix}{{{Q_{i,j}^{*} = {{Q_{i,j}\frac{2\left( {A_{i}/\pi} \right)^{1/2}}{2 \cdot 138}} = {0.004088\quad A_{i}^{1/2}Q_{i,j}}}};}{{i = 1},\ldots\quad,{n\quad;{j = 1}},\ldots\quad,406.}} & (7)\end{matrix}$Stage II probabilities are computed by combining these area-adjustedconditional relative frequencies with the corresponding Stage Iprobabilities, according to the following Equation (8):p _(i) ^((II)) =p _(i) ^((I)) +q _(i,j) −p _(i) ^((I)) , i=1, . . . ,n;j=1, . . . ,406;   (8)where, according to the following Equation (9):$q_{i,j} = \left\{ \begin{matrix}{\frac{{.837}Q_{i,j}^{*}}{100},{{if}\quad{the}\quad{storm}\quad{in}\quad{ocean}\quad{sector}\quad j\quad{is}\quad a\quad{unnamed}\quad{depression}}} & {\quad\left( {9a} \right)} \\{\frac{Q_{i,j}^{*}}{100},{{if}\quad{the}\quad{storm}\quad{in}\quad{ocean}\quad{sector}\quad j\quad{is}\quad a\quad{tropical}\quad{storm}}} & {\quad\left( {9b} \right)} \\{{\frac{1.72Q_{i,j}^{*}}{100},{{if}\quad{the}\quad{storm}\quad{in}\quad{ocean}\quad{sector}\quad j\quad{is}\quad a\quad{{hurricane}.}}}\quad} & {\quad\left( {9c} \right)}\end{matrix} \right.$Here, 0.837 is the proportion of tropical depressions that have gone onto at least tropical weather strength (1991-2004, reflecting currentoperational practice at NHC), and 1.72 is the ratio (1886-1998) of thenumbers of tropical storms to hurricanes in the Atlantic basin. Thepurpose of Equation (9) is to reflect the fact that the existence of ahurricane is more threatening, on average, than the presence of atropical storm, which is in turn more threatening than the presence of atropical depression. The probability from Equation (8) is substitutedfor p_(i) in Equation (4) when the Stage II risk assessment isappropriate for county iEquation (8) reflects the increase in risk, over and above the baselinerisk to county i expressed by p_(i) ^((I)), attributable to the presenceof a tropical cyclone in ocean sector j. The conditional probabilitiesq_(i,j) are combined with (rather than replace) the Stage Iprobabilities in Equation (8), because county i continues to be at(climatological) risk for being struck by a hurricane, even if the stormin ocean sector j fails to make landfall as a hurricane. If theconditional probability q_(i,j) is substantial, p_(i) ^((II)) will beappreciably larger than p_(i) ^((I)). If the tropical cyclone in oceansector j has negligible probability of affecting county i as ahurricane, Equation (8) implies p_(i) ^((II))≅p_(i) ^((I)).C. Stage III Probabilities

Stage III probabilities will be based on the NHC hurricane windforecasts provided as part of the official advisory for each tropicalcyclone. The system that is expected to be in place for these forecastsfor the 2006, 2007, and later hurricane seasons (currently described byTPC as “experimental”) will produce probability forecasts for windspeedsof at least hurricane force within the upcoming 120 hours (after eachadvisory), when these probabilities are at least 2.5%. Examples areshown at www.nhc.noaa.gov/feedback-pws-graphics2.shtml?. Denote thecurrent TPC forecast for hurricane-force winds in county i as f_(i).Analogously to Equation (8), the Stage III probabilities are computed bycombining these forecasts with the Stage I probabilities from Equation(6), again because failure of the current tropical cyclone to affect theU.S. as a hurricane does not preclude the k^(th) hurricane fund frompaying out for some subsequent storm. Specifically, the Stage IIIprobabilities are computed using the following Equation (10):p _(i) ^((III)) =p _(i) ^((I)) +f _(i) −p _(i) ^((I)) f _(i) , f _(i) >q_(i,j) .   (10a)orp _(i) ^((III)) =p _(i) ^((II)) , f _(i) <q _(i,j).   (10b)Equation (10b) includes the possibility that the storm in question mayaffect a county for which f_(i)=0, because these TPC forecasts are setto zero if the probability is smaller than 2.5%. Again the Stage IIIprobabilities from Equation (10) are substituted for p_(i) in Equation(4) when explicit TPC forecasts for hurricane-force winds are currentfor some portion of the U.S.D. Combining Stage II and Stage II Probabilities

It can happen that two or more Atlantic tropical cyclones are inexistence at the same time. In such cases, their strike probabilitiesfor each county i need to be combined in some way, to yield the largerprobability that either one or the other might affect the county inquestion. Let p_(i)(1) be the probability of the first of these stormsfor county i, calculated using either Equation (8) or Equation (10), asappropriate. Similarly, let p_(i)(2) be the corresponding value for thesecond of these storms. If there are only two such cyclones present, thecombined probability p_(i) to be used in the pricing Equation (4) isobtained using the following Equation (11)p _(i) =p _(i)(1)+p _(i)(2)−p _(i)(1)p _(i)(2)   (11)This probability would be applied equally to the next two hurricanefunds (assuming that there are two or more) that are still active andaccepting entries.

If there is a third such tropical cyclone, denote its probability forcounty i, calculated from the Equation appropriate to its Stage, asp_(i)(3). The combined probability for county i in Equation (4) wouldthen be, according to Equation (12)p _(i) =p _(i)(1)+p _(i)(2)+p _(i)(3)−p _(i)(1)p _(i)(2)−p _(i)(1)p_(i)(3)−p _(i)(2)p _(i)(3)+p _(i)(1)p _(i)(2)p _(i)(3)   (12)This probability would be applied to the next (up to) three hurricanefunds still accepting entries.IV. Closing Hurricane Funds

Hurricane funds cease to be available for further entries when thecorresponding hurricane is sufficiently close to a U.S. land area.“Sufficiently close” could mean that either a hurricane watch orhurricane warning has been issued for a U.S. coastal county. BecausePuerto Rico and the U.S. Virgin Islands are relatively far from the U.S.mainland, a hurricane fund can be closed for these two territorieswithout it necessarily being closed for the rest of the U.S. Because ofthe prevailing westward tracks of tropical cyclones at low latitudes, ahurricane fund that is closed because of storm proximity to the U.S.mainland is also closed for Puerto Rico and the U.S. Virgin Islands.

V. Payout Algorithm

Shares purchased in the k^(th) hurricane fund for counties traversed bythe k^(th) U.S. landfalling hurricane are “qualifying shares.” In oneinstance, these countries are defined by the NHC operationaladversaries. In another instance, these counties are defined as thosecontaining a “best track” hurricane position or a portion of a lineconnecting two “best track” hurricane positions, as portrayed in the“best track” Table of the official TPC Tropical Cyclone Report for thatstorm. Payouts are preferably determined by dividing the availableHurricane Funds (e.g. participant entries less state and managementpercentages) by the number of qualifying shares, and paying that amountfor each qualifying share.

In cases where there may be multiple tropical cyclones in existence atthe same time, priority is determined according to time of first U.S.landfall. For example, if the hypothetical hurricane “Alice” makeslandfall after hurricane “Bob,” “Bob” would be assigned to Fund 1 and“Alice” would be assigned to Fund 2.

It is anticipated that payouts to Qualifying Shares will be made withintwo weeks of the final NHC Advisory for the storm in question. Inunusual cases, such as for storms that may have the potential toreintensify and affect the U.S. again, Fund payouts may be delayedbeyond two weeks at the sole discretion of the Funds Administrators. Inall cases, Funds disbursements will be made on the basis of the best andmost recent information available from the National Hurricane Center atthat time about the storm in question, and will not be subject torevision in the event of subsequent updates to that information.

Caveats Regarding Fund Payouts

The above rules for determining Qualifying Shares have been somewhatidealized, relative to real-world hurricane behavior, in the interest ofhaving a promptly available, clear, explicit and automatic way ofdisbursing Fund assets to Qualifying Shares. In particular:

There will often be counties experiencing hurricane-force winds and/orother hurricane impacts that nevertheless do not qualify as having been“hit” according to the definition used by the Hurricane Funds. This willbe the case especially for the larger and more powerful storms. Fundinvestors whose intention is to, in effect, supplement their insurancecoverage will therefore be encouraged to invest in surrounding countiesalso. To encourage investors to protect themselves, the Funds site willautomatically flash several counties which border the county initiallyselected and urge investors to spread their investment to includesurrounding counties. In this manner, which we call a “collar” theinvestor will have greater opportunity to collect funds if damage occursbut the eye of the hurricane does not enter their county.

Because qualifying counties are determined on the basis of stormpositions only at particular, and possibly irregular times, smalldiscrepancies between the calculated track (used to determine QualifyingShares) and the actual track (as determined some months later in theofficial NHC Tropical Cyclone Report for that storm, or that might beevident at the time of the storm from a series of weather-radar images,for example) can and will occur. Again, it may be advisable for someindividuals to invest in nearby counties, in addition to the county(s)in which they have the most interest.

The U.S. Census Bureau data files are only approximations to the truegeographical outlines of many counties. They consist of a collection ofline segments, and so will not accurately follow curving countyboundaries. In addition, portions of some counties (particularlyrelatively small islands) are not included in the Census Bureau'sCartographic Boundary Files. For example, the Dry Tortugas are notincluded in the Cartographic Boundary File for Florida, so that ahurricane passing over this portion of Monroe County, Fla., would not byitself constitute a “hit” on Monroe county for the purpose ofdetermining Qualifying Shares.

VI. Website Features

The Hurricane Fund will preferably be run through a website thatcalculates share prices automatically, according to information from TPCadvisories that are updated four times daily. Accordingly, it will benecessary for the site to be unavailable for accepting entries forshort, pre-scheduled, periods of time every 6 hours for example. Inaddition, the website may need to be able to close from time to time onan unscheduled basis, in order to incorporate new information that isoccasionally provided by the TPC at other than the scheduled 6-hourlyupdate times. The lengths of these website blackout times will depend onthe speed with which the NHC advisories can be obtained, and theirinformation transformed to updated hurricane probabilities for thehurricane fund. Even when there are no Atlantic tropical cyclones inexistence, share prices will be updated during the regular blackoutperiods, by incrementing the date, jdate in Equation (4), by 0.25, fourtimes daily.

Preferably, first-time entrants will need to register. Passwordprotection will be preferred if a single credit-card account is to beassociated with each registration, in order for any eventual payouts tobe made to that account. SSN information is preferably made part of theregistration in order for the IRS (and possibly also some states) totrack tax liability on any payouts.

Current share prices for all available counties are preferably displayedboth graphically and in tabular form. Clickable maps (whole-coast andindividual state) are also preferably made available, with share pricesindicated approximately with a color code. State-by-state pulldown menuscould also be provided if desired. Participants are preferably given theoption of specifying their entries either in terms of shares bought, ordollars to be entered, for each county selected.

Preferably, a whole-state entry can be defined by automatically issuingan equal number of shares for each county in play, within the state inquestion. This approach would place more money on counties more likelyto be affected, and so would severely down-weight essentiallyzero-probability counties, such as those in west Texas. Here the numberof shares bought for each county is simply the dollar amount to beentered, divided by the sum of share prices according to Equation (4),over all counties in that state.

The sums entered to date in each hurricane fund (and available forsubsequent payout) are preferably posted and continuously updated.However, it may be difficult to calculate for potential entrants thepossible payoffs for particular entries that they are contemplating,because those payoffs will depend on the track of the eventual storm inquestion.

VII. Algorithm Parameters

As noted above, several parameters in the share price algorithm areadjustable. In one example these parameters could be defined before thebeginning of a given year's hurricane funds as follows. These exemplaryparameters are:

-   -   K=# of hurricane funds that will be opened initially.    -   n=# of counties in the game    -   D=discount rate (as discussed above)    -   F=pricing factor (as discussed above)

The choice for the number, K, of initial hurricane funds to be runinvolves a tradeoff between numbers of years when one or more hurricanefunds do not pay off, versus numbers of years when there are more U.S.landfalling hurricanes than initial hurricane funds. Using the Poissonprobabilities from FIG. 21 table 1, these tradeoffs are approximately asindicated in FIG. 23, table 3.

If all counties in an included state will be in play, it is necessaryonly to specify the states to be considered in order to determine n. Forexample Oklahoma has a single county with Q≠0, and Kentucky has seven.All eight of these have Q=0.01. Accordingly, it is preferred that thesestates not be included in the financial activity. A large number ofeffectively irrelevant counties may also be excluded under this plan,especially in Texas, but also in Arkansas and Tennessee.

Preferred Characteristics

As noted above, a number of different alternatives and variations inconducting financial activities according to principles of the presentinvention are possible. The following discusses representativealternatives and variations which are preferred, but not necessarilyrequired, when conducting financial activities according to principlesof the present invention. Although the following exemplary preferredcharacteristics may, generally speaking, be compatible with one another,it is possible that any number of these characteristics could be madeinconsistent with, or mutually exclusive of other characteristics. Theseexemplary characteristics include:

-   -   1. Variability factors affecting at least one of said investment        price and said distribution/payout. It is generally preferred        that variability factors include, at least a consideration of        the time interval between investment and event occurrence and a        defined probability of predicted outcome, preferably set at the        time of investment. Other variability factors may also be        incorporated.    -   2. Prices charged to participants for their chosen investments        preferably continually change due, for example, to the        variability factors at play at a given time. In general, it is        preferred that there be no elimination of price changes to        shorten processing delays, or for other reasons.    -   3. Prices at any given time for any predicted outcome are        preferably made to be the same for all participants.    -   4. Payouts to successful, qualifying participants are preferably        made according to the same set of rules which apply to all        participants. Generally speaking, it is preferred that no        rewards be given for preferred participants.    -   5. All winners (qualifying participants) share the pot. That is,        it is generally preferred that there are no odds multiplying a        participant's investment. Also, it is generally preferred that        payouts are not made from the provider's personal account—unlike        the “House” of certain gambling activities which pays out        winning bets from its own account.    -   6. Provider does not engage as a participant. For example, it is        generally preferred it that there be no hedging where, for        example, there may be excessive bidding.    -   7. Participants do not compete against the “house” i.e. the        provider. 8. It is generally preferred that financial activity        not be altered in response to the amount of investment activity.    -   9. Financial activity encompasses a single event or type of        event over a given “season”.    -   10. It is generally preferred that the participants be able to        objectively and independently observe the events for themselves,        as they unfold.    -   11. It is generally preferred that, apart from financial        responsibility, a participant's investment be “accepted” only in        terms of data format. Optionally, acceptance can be related to        an optional investment cap. It is generally preferred that there        be no extra qualification for each investment occurrence.    -   12. It is generally preferred that financial activity be carried        out as much as possible in real-time, and that this be made        possible by virtue of rules definitions, especially definitions        of events and event outcomes which occur in a well defined        environment/system. It is generally preferred that the selection        of events for the financial activity be limited to an absolute        minimum—i.e. a single event.    -   13. It is generally preferred that the financial activity be        restricted to tropical weather events, and in one instance, only        to hurricane events.    -   14. It is generally preferred that the financial activity be        further restricted to events comprising at least one of said        landfall and said land track. It may also be preferable in        certain instances to limit financial activity to hurricanes        having a certain category strength at some defined time during        the ongoing financial activity.    -   15. It is preferable, in certain instances, that multiple stages        of probability assessment be applied to at least one of said        investment and said payout.    -   16. It is preferable in certain instances that the external        objective independent information source be limited to the        National Hurricane Center (NHC), and optionally to its        subsidiary and/or related agencies (e.g. TPC).    -   17. In certain instances, it may be preferable to limit        financial activity to only the United States and its territories        and possessions.        Other Preferences

In addition to the above preferred characteristics, it is generallypreferred that the graphical user interface be used to conveyeducational information to participants, on an ongoing, developingbasis. For example, it is generally preferred that the participants beprovided with a rich source of information to inspire further interestin the financial activity and the skills which it sharpens. For example,it is generally preferred that live feeds of various external objectiveindependent information sources be relayed to the participants on anongoing basis. For example, storm locations and changing intensities,along with their projected path can be displayed on a flat map. Thistype of data can be obtained from the National Hurricane Center, forexample. Other competing predictions from other independent sourcescould also be displayed, preferably in different colors on a common map.

As storms advance and locations change, it is preferred thatcalculations of updated current pricing be displayed on an ongoingbasis, with any necessary qualifying assumptions being made available tothe participants.

Also, it is generally preferred that the current dollars invested forparticular geographical areas be displayed along with historical odds orprobabilities for the geographical area, thus making it possible forparticipants and interested observers to determine what the payout willbe under the specified conditions, if the storm should develop aspredicted. For example, payoffs for a given geographical area canreflect different times of investment, different total amounts of moneyinvested in the overall financial activity, different severity levels orother characteristics of the storm and the probability that the stormwill hit the area of interest, based upon historical data and/or nearterm predictions. It is also generally preferred that the participantsand interested observers be able to access a data window showing thecurrent total of funds invested, and a profile of geographical areaswith the number of investments being made for that local area.

In general, it is preferred that the financial activity have aneducational study component to sharpen a participant's knowledge andskills useful for improving their financial position. This knowledge andskill level will also help the participants cope with the reality ofbeing subjected to potentially harmful storm activity. It is alsogenerally preferred that the financial activity display helpfulinformation to participants, such as checklists of items needed toprepare for an oncoming threatening event. These checklists can helporganize participant's activities in the decreasing preparation timeavailable. If desired, checklist information can be solicited fromparticipants and posted in a public viewing area. In another example, adisplay area can also be provided showing constantly updated damageestimates, threats to life and similar public safety-relatedinformation.

Although exemplary implementations of the invention have been depictedand described in detail herein, it will be apparent to those skilled inthe relevant art that various modifications, additions, substitutions,and the like can be made without departing from the spirit of theinvention and these are therefore considered to be within the scope ofthe invention as defined in the following claims. For example, variouscommunication functions can be grouped into one or more communicationunits to perform one or more communication tasks.

1. A system for providing a user a selection of land area database data,including geographic items and data relevant to conducting a financialactivity, the system being arranged to: display a geographic item;receive a user selection of a displayed portion of the item; and provideadditional database data relating to said selected portion, in responseto said selection.
 2. A system as recited in claim 1, wherein saidgeographic item is a map and said additional data is a more detailedmap.
 3. A system as recited in claim 38, further comprising shadingportions of said geographic item not eligible for selection.
 4. A systemas recited in claim 1, wherein said portions of said geographic item areselectable by touch screen, click and point, or an input pen device. 5.A system as recited claim 1, further comprising an active graphical itemexpanding the selected portion to include one or more surroundingportions.
 6. A system as recited in claim 1, further comprising anactive graphical item presenting to the user a selection of secondaryparameters.
 7. A system as recited in claim 4, wherein said secondaryparameters indicate characterizing factors associated with a naturalevent.
 8. A system as recited in claim 1, wherein said geographic itemcomprises geographic location data linked to a weather databaseincluding meteorological or climatological data.
 9. An article ofmanufacture including a machine readable medium for causing a computersystem to conduct a financial activity between a provider and aplurality of participants, based on at least one natural event,comprising: a module for conducting financial activity between aprovider and a plurality of participants, for receiving natural eventinformation from an external independent information source and forproviding financial activity information to the participants using agraphical user interface for providing user selection of land areadatabase data including geographic items and data relevant to conductinga financial activity, the graphical user interface being arranged todisplay a geographic item, receive a user selection of a displayedportion of the item and provide additional database data relating tosaid selected portion, in response to said selection; at least onecommunication module for conducting a communication activitycommunicating between the financial activity module and an externalindependent information source for receiving natural event informationfrom the external independent information source; the at least onecommunication module communicating between the financial activity moduleand the participants to receive prediction data from the participants,pertaining to the natural event; a module for comparing theparticipants' prediction data to the indication of the occurrence of thenatural event; and the at least one communication module furthercommunicating between the financial activity module and theparticipants, to provide to the participants an indication of a matchingoutcome based upon a matching outcome of the comparing step and toindicate to the participants having a protective outcome from thecomparing step, the portion of funds to be paid from a common poolcollected from the participants.
 10. A system for displaying on agraphical user interface, information relating to financial activityconcerning naturally occurring tropical events, for investment relatedactions by a user, comprising: a component for graphically displayingand updating in substantially real time in a first portion of saidgraphical user interface, a map of user selectable geographical areasfor potential investment; a component for graphically displaying andupdating in substantially real time in a second portion of saidgraphical user interface, probabilities for each geographic areaselected by the user, of a first landstrike of a hurricane originatingat sea; a component for graphically displaying and updating insubstantially real time in a third portion of said graphical userinterface, data for each geographic area selected by the user, relevantto conducting a financial activity; and a component for graphicallydisplaying said trade related actions made on said graphical userinterface by said user
 11. A computer implemented method of providing auser a selection of land area database data including geographic itemsand data relevant to conducting a financial activity, the methodcomprising: displaying on a graphical user interface a geographic item;receiving a user selection of a displayed portion of the item; and inresponse to said selection, providing additional database data relatingto said selected portion.
 12. A method as recited in claim 11, whereinsaid geographic item is a map and said additional data is a moredetailed map.
 13. A method as recited in claim 11, further comprisingshading portions of said geographic item not eligible for selection. 14.A method as recited in claim 11, wherein said portions of saidgeographic item are selectable by touch screen, click and point, or aninput pen device.
 15. A method as recited in claim 11, the methodfurther comprising expanding the selected portion to include one or moresurrounding portions.
 16. A method as recited in claim 11, the methodfurther comprising receiving user selection of secondary parameters. 17.A method as recited in claim 16, wherein said secondary parametersindicate characterizing factors associated with a natural event.
 18. Amethod as recited in claim 11, wherein said geographic item comprisesgeographic location data linked to a weather database includingmeteorological or climatological data.
 19. A method as recited in claim17, wherein said characterizing factors associated with a natural eventinclude a storm designation and a time designation of a time duringoccurrence of the storm.
 20. A graphical user interface for providing auser a selection of land area database data including geographic itemsand data relevant to conducting a financial activity, the graphical userinterface being arranged to: display a geographic item; receive a userselection of a displayed portion of the item; and provide additionaldatabase data relating to said selected portion, in response to saidselection.
 21. A graphical user interface as recited in claim 20,wherein said geographic item is a map and said additional data is a moredetailed map.
 22. A graphical user interface as recited in claim 20,wherein said geographic item further comprises shaded portions noteligible for selection.
 23. A graphical user interface as recited inclaim 20, wherein said portions of said geographic item are selectableby touch screen, click and point, or an input pen device.
 24. Agraphical user interface as recited in claim 20, the graphical userinterface further comprising means for expanding the selected portion toinclude one or more surrounding portions.
 25. A graphical user interfaceas recited in claim 20, the graphical user further comprising means forreceiving user selection of secondary parameters.
 26. A graphical userinterface as recited in claim 25, wherein said secondary parametersindicate characterizing factors associated with a natural event.
 27. Agraphical user interface as recited in claim 20, wherein said geographicitem comprises geographic location data linked to a weather databaseincluding meteorological or climatological data.